- Saturday, June 21, 2025
Despite strong revenue and profit figures, Accenture’s weakening new bookings and cautious full-year outlook signal trouble ahead for global and Indian IT firms amid persistent macroeconomic uncertainty.
By: Vibhuti Pathak
Accenture reported robust financial results for the second quarter of fiscal 2025, with revenues reaching $16.66 billion—a 5 per cent year-on-year increase in US dollars and 8.5 per cent in local currency.
This performance placed the company at the top end of its guided range, reflecting broad-based growth across geographic markets and industry groups. Consulting revenues grew by 3 per cent in US dollars and 6 per cent in local currency, while managed services revenues rose by 5 per cent and 8.5 per cent, respectively.
Earnings per share also saw a 7 per cent increase, reaching $2.82 for the quarter. The company’s operating margin improved to 13.5 per cent, and free cash flow stood at $2.68 billion.
Despite these positive headline numbers, Accenture narrowed its full-year revenue growth outlook to 5-7 per cent in local currency, compared to its earlier guidance of 4-7 per cent. This tightening of guidance, alongside the company’s own commentary, suggests a cautious outlook for the remainder of the year.
Weakness in Bookings Raises Concerns
A key area of concern in Accenture’s results was the decline in new bookings. The company reported new bookings of $20.91 billion for the quarter, a 3 per cent decrease in US dollars and flat in local currency compared to the same period last year.
Notably, consulting new bookings were $10.47 billion, while managed services bookings were $10.44 billion. The outsourcing book, in particular, saw a sharp 9 per cent year-over-year decline, signaling softness in demand for these services.
This drop in bookings is significant, as it points to potential challenges in sustaining future revenue growth. The management also highlighted increased uncertainty for calendar year 2025, indicating that the next several months could remain volatile for the company and the broader IT services sector.
Macroeconomic Uncertainty Impacts Client Spending
Industry experts, including Sandip Agarwal of Sowilo Investment Managers, note that the core issue is not company-specific but rather rooted in global economic uncertainty. Clients remain unsure about the trajectory of the economy, the timing and likelihood of interest rate cuts, and the potential impact of tariffs.
This uncertainty has led to a freeze in discretionary spending, with clients holding back on releasing non-essential budgets. As a result, IT services companies are struggling to convert pipeline opportunities into actual business, affecting management confidence and forward visibility.
Agarwal emphasizes that until there is greater clarity on the economic front, both in the US and globally, neither clients nor IT service providers can make bold investment decisions. This environment of caution is expected to persist, dampening near-term growth prospects for the sector.
Implications for Indian IT Companies
Accenture is widely regarded as a bellwether for the global IT services industry, and its performance often sets the tone for Indian IT companies. Historically, Indian IT firms have looked to Accenture’s results and commentary as a benchmark for their own earnings outlook.
The latest quarter marks a shift, as even the outsourcing segment—which had previously shown resilience—recorded a notable decline. This is the first time in several quarters that such softness has been observed, raising concerns that Indian IT companies may report similar trends of uncertainty and muted growth in the coming quarters.
Additionally, Indian IT stocks have experienced a significant run-up in recent months. Investors will need to weigh the positive momentum in share prices against the emerging signals of caution from global leaders like Accenture.
Outlook: Waiting for Clarity
In summary, while Accenture’s Q2 FY25 results showcased solid revenue and profit growth, underlying challenges such as weaker bookings and heightened economic uncertainty are clouding the outlook.
Until macroeconomic clarity emerges, both global and Indian IT companies are likely to remain in a holding pattern, with managements and investors alike awaiting stronger signals before making decisive moves.
