Disclosing that GenAI project bookings constitute 2.4% of its total workload indicating an acceleration in revenue from AI for IT companies The post Accenture’s Gen AI Numbers Signal Shift for Indian IT appeared first on Analytics India Magazine.
In its recently announced earnings call, global IT giant Accenture revealed that despite revenue growth of a mere 3% with $16.2 billion, it made upwards of $450 million in new bookings from GenAI applications alone, including a deal with McDonald’s and BBVA, amongst others.
The earnings from GenAI, up 50% from $300 million in the previous quarter, indicate Accenture’s early leadership position in GenAI compared to regional IT providers. The bold proclamation of such a strong number also makes them stand ahead, infusing market confidence in the company.
“With respect to GenAI, I just want to say $450 million in sales this quarter, we’re very pleased with. It demonstrates we are leading here,” said CEO Julie Sweet.
On the other hand, industry experts anticipate that gen AI’s contribution to the top IT firms’ overall revenue to be less than 1%, even with an increasing number of pilots and partnerships in this emerging field. Apurva Prasad, Vice-President of Institutional Research at HDFC Securities, observed, “The overall scale of AI deployments across sectors…is quite strong. However, generative AI’s contribution as part of it remains small for the time being.”
Furthermore, in comparison, Indian IT companies like TCS, Infosys, Wipro, HCLTech, and LTIMindtree haven’t released any GenAI-specific numbers indicative of their roadmap or growth indicators. Instead, these companies have focused on partnerships with giants like Microsoft, AWS, and Google. They are focused heavily on employee upskilling and injecting significant investments, with companies like Wipro planning $1 billion in AI over three years, and launching the Wipro AI360 ecosystem.
GenAI Integration with Overall Strategy
Accenture incorporates GenAI within its broader digital transformation strategies for clients, ensuring alignment with their overall business goals. CEO Julie Sweet emphasised that GenAI is not plug-and-play, but a sophisticated technology requiring deep understanding to be effectively scaled.
“And this is Accenture’s leadership position, right? We have a strategy, consulting, deep industry and functional expertise,” added Sweet, underscoring Accenture’s unique position in this evolving field.
Experts predict GenAI bookings could exceed $4 billion in FY24, with Accenture poised to capture a significant share, backed by its $3 billion investment in data and AI over three years aimed at scaling client value in 2024. The company derives confidence to go all in from its experienced cloud journey
In the realm of acquisitions and partnerships, Accenture’s collaborations with major industry players boost its capacity to merge technology with business value. Sweet foresees 2024 as a pivotal year, transitioning clients from experimentation to scalable GenAI applications.
“Think of 2024 as being the shift for our clients from experimentation to scale, and we believe we’re in the best position to lead that shift to value.”
Accenture is actively integrating GenAI in client projects, such as developing a GenAI-powered financial coach for BBVA and enhancing content production for a global hospitality group. A key project with McDonald’s focuses on integrating cloud technology and GenAI to revolutionise customer and employee experiences.
The company’s expansion strategy in the space is also marked by significant acquisitions across various regions, totalling $788 million, enhancing cloud capabilities and strengthening its AI expertise. Notably, the acquisition of Ammagamma adds 90 AI specialists to Accenture’s team, contributing to its goal of doubling its skilled data and AI practitioners to 80,000.
Previously, the company had invested in a total of 11 AI-related businesses, of which three are from India: Flutura, Bridgei2i, and Byte Prophecy, with Flutura being the most recent investment.
A Good Omen for Indian IT
Indian IT companies have also shifted their focus to building a skilled workforce and ramping up their investments in GenAI as clients have shown a willingness to fund early PoC projects—leading to a new wave of collaboration between service providers and their clients to explore GenAI’s potential.
Indian IT majors have trained nearly seven lakh employees in GenAI. TCS has over 100,000 GenAI-ready employees, according to Milind Lakkad, executive vice president and global head – human resources. Infosys has trained 57,000 employees, while Wipro has trained 180,000. HCLTech and LTIMindtree are also focusing on training their employees in GenAI.
Infosys has launched Topaz, focusing on GenAI tech, with CEO Salil Parekh stating the company is engaged in 80 GenAI projects. Meanwhile, Coforge introduced Quasar, a GenAI platform with over 100 cognitive and generative use cases, and LTIMindtree launched Canvas.ai to help clients scale their GenAI capabilities.
Additionally, Accenture, which follows a September to August financial year, disclosed that its GenAI project bookings constitute approximately 2.4% of Accenture’s total workload—which accounted for only 0.6% during the March-May period. This indicates an acceleration in momentum and increasing revenue for the industry.
However, A researcher from a Mumbai-based brokerage, requesting anonymity, said GenAI use cases might eventually lead to faster monetisation, but not immediately. They added, “At least the second half of this fiscal will remain without any major deals in generative AI for any of India’s IT outsourcers.”
The economic downturn has also impacted Indian IT stocks. Shares of TCS, Wipro, and Tech Mahindra have declined by 2% since September end, while Infosys’ shares have stayed flat. HCL Technologies, on the other hand, has seen growth, attributed to its mega-deal wins and a strong engineering practice.
Amid these challenges, Infosys and HCL Technologies have revised their annual revenue growth projections downwards. Infosys has reduced its growth outlook to 1-2.5% for this fiscal year, while HCL has adjusted its guidance to 4-5% organic growth. Wipro indicated a potential revenue contraction of up to 3.5% for the current quarter.
Analysts also expect IT services expenditure to remain muted in the near term as businesses typically decide their annual budgets only after February. Accenture itself has pointed to slower budget-related decision-making, especially in tech and media companies, setting its q2 target to -2% to 2%. Hence, while gen AI holds promise, its current impact on revenue growth in India’s IT sector seems limited amid the industry’s ongoing struggle with global economic uncertainties and conservative client expenditure. However, it will be interesting to see how earnings from GenAI pan out for Indian IT as the quarter approaches.
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