More government projects are coming in the way of Accenture Plc. (ACN - Analyst Report). This time it is a project from the state government of India. The company has secured a 12-month contract for technology and management-consulting services for the Aadhaar biometric identification program including the re-engineering and implementation of beneficiary programs in the state of Punjab in India.
This particular model will ensure accurate information of the recipients and reduce the cost of service delivery by using government-to-citizens payments.
Therefore, the win suggests that ACN is slowly gaining a stronger foothold in the Indian consultancy market. As per the latest finding of an Indian English daily “Livemint”, Accenture and IBM (IBM - Analyst Report) are ahead of TCS on revenue productivity. Accenture’s higher productivity may be traced to its high-end consulting services, while IBM’s success stems from its bundling strategy (hardware and software solutions).
Therefore, ACN is on the right track to widen its geographical presence. It is, however, not new for Accenture to set up a new unit to provide some specialized services to companies in different geographies. To serve its government clients in a better way, Accenture formed the U.S. Federal Advisory Board in 2012.
The company has also invited experts with years of experience in Fed activities to join the board so that they can facilitate its dealings with government organizations. This will provide Accenture more insight into the current requirements to deal with critical IT operations in government departments. It will also help the company win more federal as well as government deals, going ahead.
Although deal wins from government and non-government bodies are helping the company grow, the consulting business needs special attention. This is because new consulting projects take time to come, which could affect the overall results of the company.
Other companies such as Cognizant Technology Solutions Corp. and International Business Machines Corp. are making similar strategic moves, which could be a matter of concern for the company. Moreover, a strained spending environment and Accenture’s broad European exposure (roughly 40.0%) may hurt its growth prospects to some extent.
Accenture currently has a Zacks Rank #3 (Hold) primarily due to downward estimate revisions by analysts. However, stocks like CRA International Inc. (CRAI - Analyst Report) and Information Services Group Inc. (III - Snapshot Report), both of which have a Zacks Rank #1 (Strong Buy), are worth considering.