GenAI is not plug and play. It is not just technology. … In order to scale, you have to deeply understand the technology, which is still rapidly changing, and the business value. And this is Accenture’s leadership position. We have strategy. We have consulting, [and] deep industry and functional expertise. We’re the biggest partner with every major player,’ says Accenture CEO Julie Sweet.
AI is becoming a key growth area for Accenture, with the company taking an early leadership position, according to the company’s Chairperson and CEO Julie Sweet.
Sweet on Tuesday told financial analysts in her prepared remarks during Accenture’s first fiscal quarter 2024 quarterly financial conference call that the New York-based global consultant and solution provider has taken an early leadership position in GenAI, which will be an important part of its clients’ reinvention in the next decade.
Accenture in fiscal 2023 sold about 300 generative AI-related projects worth $300 million, and demand continued to accelerate in the first fiscal quarter 2024 to over $450 million in GenAI sales.
[Related: Accenture CEO: ‘Companies Will Need To Reinvent How They Operate With AI At The Core’]
“As you know, we are investing $3 billion in AI over three years,” Sweet said. “For many of our clients, 2023 was a year of generative AI experimentation. We are now focusing on helping our clients in 2024 realize value at scale. We are excited about the recent launch of our specialized services to help companies customize and manage foundation models. We’re seeing that the true value of generative AI is to deliver on personalization and business relevance. This is driven by context and accuracy. Data readiness along with foundation model choices and customization are some of the most important steps and decisions that companies will make in the next year as they pursue value.”ADVERTISEMENT
Accenture’s clients will use an array of models to achieve business objectives, Sweet said.
“Our proprietary ‘switchboard’ allows a user to select the combination of models to address business context or factors like cost or accuracy,” she said. “And we will offer rigorous training and certification programs to organizations using these new services to customize and scale GenAI solutions and transform every link in their value chain.”
Accenture also continues to invest in AI-related AI acquisitions, including Ammagamma, an Italian company that helps companies advance their uses of AI and generative AI technologies, Sweet said. Accenture late last month unveiled the plan to acquire Ammagamma.
“With this acquisition, we will add 90 experienced AI professionals, many specializing in generative AI, along with the expertise that includes engineering, mathematics, economics, historians, philosophers, and designers, who will join our growing network of professionals in our advanced center for AI,” she said. “And we are progressing towards our goal of doubling our deeply skilled data and AI practitioners from 40,000 to 80,000, with an additional 5,000 practitioners as of Q1.”
When asked during the question and answer period of the conference call whether GenAI has truly become a meaningful conversation with clients, Sweet said that the $450 million in sales during the quarter she discussed earlier demonstrates Accenture’s leadership in this business.
Conversations are indeed changing as clients want to move from proofs of concept to material value, and Accenture is well-positioned for those conversations, she said.
“Why? GenAI is not plug and play,” she said. “It is not just technology. … In order to scale, you have to deeply understand the technology, which is still rapidly changing, and the business value. And this is Accenture’s leadership position. We have strategy. We have consulting, [and] deep industry and functional expertise. We’re the biggest partner with every major player. We’re working with them at a product level. And we can bring those two things together. So, think of 2024 as being the shift for our clients from experimentation to scale, and we believe we’re at best positioned to lead that shift to value.”
Sweet, in her prepared remarks, also said that Accenture remains a very acquisitive company, having closed 13 acquisitions during the first fiscal quarter for a total of $788 million in strategic areas across its geographic markets.
In North America, this included:
- Anser Advisory, which provides solutions to public and private sector clients implementing capital projects and programs.
- Comtech, a consulting and program management company for infrastructure projects in Canada.
- The Shelby Group, which provides procurement optimization, supply chain, and spend analytics solutions.
- Ocelot Consulting, which specializes in full-stack development, data engineering, data science, and strategy and execution for cloud modernization.
- Incapsulate, a Salesforce-focused digital transformation consulting firm.
- ConcentricLife, a healthcare-focused digital marketing company.
Outside North America, acquisitions included:
- Innotec, a Spanish cybersecurity provider.
- ON Service Group, a German provider of business process services in the insurance industry.
Nautilus Consulting, a U.K.-based digital healthcare and talent firm. - The Storytellers, another U.K.-based digital healthcare and talent firm.
- Solnet, a New Zealand-based IT services provider with deep technology consulting experience for New Zealand government and private organizations across multiple industries.
- MNEMO, a Mexico-based cybersecurity company
- Signal, a Japan-based digital marketing services company.
Sweet said that, despite negative impacts from the macro-environment, the fundamentals of the IT industry remain unchanged.
“All strategies continue to lead to technology, and companies need to reinvent every part of their enterprise using tech, data, and AI to optimize operations and accelerate growth,” she said.
That, Sweet said, means that all companies must build a digital core.
“Strategy and consulting, which brings our deep industry and functional expertise, is critical to how we differentiate by helping our clients ensure they drive business value from their digital core,” she said. “We are continuing to see significant demand in areas like cloud migration and modernization, modern ERP, and data and AI including GenAI, platforms, and security, all of which represent areas of great opportunity and is still early with more digital core to be built in the future than has been done to date.”
Accenture By The Numbers
For its first fiscal quarter 2024, which closed November 30, Accenture reported revenue of $16.22 billion, up 3 percent over the $15.75 billion the company reported for its first fiscal quarter 2023.
This included North America revenue of $7.56 billion, down 1 percent from last year’s $7.62 billion; EMEA revenue of $5.80 billion, up 9 percent over last year’s $5.31 billion; and growth market revenue of $2.86 billion, up 2 percent over last year’s $2.81 billion.
When broken down by industry segment, Accenture reported CMT (communications, media, and technology) revenue of $2.67 billion, down 10 percent; financial services revenue of $3.03 billion, up 2 percent; health and public service revenue of $3.38 billion, up 13 percent; product revenue of $4.86 billion, up 4 percent; and resources revenue of $2.28 billion, up 7 percent.
When broken down by type of work, Accenture reported consulting revenue of $8.46 billion, which was flat over last year, and managed service revenue of $7.77 billion, up 6 percent.
For the quarter, Accenture reported GAAP net income of $2.01 billion or $3.10 per share, up from last year’s net income of 2.00 billion or $3.08 per share. On a non-GAAP basis, Accenture reported net income of $2.12 billion or $3.27 per share.
Looking ahead, Accenture expects second fiscal quarter 2024 revenue of $15.40 billion to $16.00 billion, which is plus or minus 2 percent compared to second fiscal quarter 2023 revenue of $15.75 billion.
For all of fiscal 2024, Accenture expects revenue growth of 2 percent to 5 percent in local currency.