Accenture (NYSE:ACN) is expected to hire at least 60,000 employees in 2012 after ending the last quarter with a global headcount of 244,000, according to an article by consultant Sramana Mitra. As Accenture tends to maintain its utilization rates stable at above 85%, the projected increase in headcount indicates that the firm is expecting good growth in its bookings for the year. Accenture is a major global player in technology consulting and IT outsourcing industries and competes with the likes of IBM (NYSE:IBM), HP (NYSE:HPQ) and Deloitte Consulting.
We estimate that outsourcing is Accenture’s biggest business making up nearly 30% of our $59.72 Trefis price estimate for Accenture which is about 15% above the market price. Below we take a look at some of the major trends that are expected to shape IT outsourcing business in 2012, and how they could impact Accenture.
Cloud Computing, M&A activity to Drive IT Outsourcing Market in 2012
According to a recent report from research firm Everest Group, the IT outsourcing market in 2012 will be driven by cloud computing and M&A activity. While a Dell-Perot, HP-EDS, or Xerox-ACS type of merger is not expected next year mainly due to the lack of attractive second-tier providers capable of delivering more than added scale, there is a possibility of large providers buying out software or cloud-based tool makers, as it was with the IBM-Emptoris deal recently. There may also be instances of an offshore provider, an Indian heritage firm for example, acquiring a major U.S.-based multinational.
In addition to driving M&A activity, cloud will be more than a buzz word and we expect to see increased adoption. Companies and their IT departments will also develop better understanding of the technology and will perform thoughtful evaluation on firm policies related to what can be classified as cloud, data that goes into it, as well as the overall review process and decision-making in regard to cloud services.
This will result in increased demand for not only Accenture’s outsourcing services but also its technology and management consulting expertise, which we think is the reason why Accenture wants to increase it headcount.
Economic Uncertainty to Keep Buyers at Bay
The report also notes that outsourcing buyers will hold back from signing contracts until current economic uncertainty lifts at least in the first half of the year. This could play a spoilsport as far as Accenture’s targets for the year are concerned.
However, by fall 2012, the business confidence is expected to improve which will boost outsourcing activity, particularly offshoring deals.
Via : Trefis