Accenture’s Q1 earnings signal turnaround for IT firms amid market challenges

Global IT services leader Accenture’s Q1 FY25 results and upgraded revenue guidance have emerged as a confidence booster for the Indian IT sector. Analysts view the performance as a positive signal for an industry navigating muted demand and cautious client spending.

Accenture revised its FY25 annual revenue growth projection to 4–7%, up from 3–6%, citing reduced forex headwinds. The company’s strong Q1 performance, including $1.2 billion in bookings driven by demand for AI and digital transformation projects, points to a growing focus on large-scale initiatives. Brokerages suggest this trend aligns well with the strategies of Indian IT firms, which are emphasising big-ticket deals amid tighter budgets for smaller projects.

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“FY25 guidance upgrade underscores the improving backdrop for Indian IT,” Motilal Oswal Financial Services noted in a report on Friday. “The initial phase of recovery in H1FY25 was sluggish, but we now see clear signs of an acceleration, with demand expanding beyond US BFSI to other verticals.”

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However, Indian IT stocks fell 1–3% on Friday, mirroring the broader bearish sentiment in the market.

Accenture’s managed services billings reached record levels, reflecting clients’ prioritisation of large-scale transformation projects, particularly in cloud and AI. Nomura observed that this aligns with Indian IT firms’ focus on long-term, strategic deals. Emkay Global added that Accenture’s shift toward “reinvention” deals, driven by AI and data-driven transformations, mirrors trends in Indian IT.

Despite these positives, Accenture’s cautious outlook underscores persistent uncertainties. CEO Julie Sweet highlighted limited improvements in overall client spending, particularly for smaller deals. “We do not currently see an improvement in overall spending by our clients, particularly on smaller deals. When those market conditions improve, we will be well-positioned to capitalise on them,” Sweet stated during an analyst call.

Analysts are optimistic about medium-term growth for Indian IT, citing tailwinds from AI adoption and large-scale transformations. “Improvement in outsourcing growth is positive for the Indian IT services sector,” Nuvama Financial Services stated. “We maintain a positive stance on the sector,

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