Accenture Q1 Review: What It Means For Indian IT Sector? Brokerages Weigh In

Accenture’s latest quarterly commentary reinforces a familiar theme for Indian IT services: demand has neither worsened nor meaningfully improved. While deal activity remains healthy and AI-led transformation continues, brokerages flag limited visibility on discretionary spending revival, keeping expectations for Indian IT growth cautious.

Investec highlights that Accenture’s management sees no deterioration or improvement in demand versus last year. Revenue and EBIT came in ahead of consensus, and deal bookings were strong — managed services bookings rose 17%, while consulting bookings increased 7%. However, Accenture retained its FY26 revenue growth guidance of 2–5% in local currency, signalling a lack of confidence in a near-term pickup in discretionary spending.

For Indian IT, Investec notes that commentary continues to focus on reducing revenue leakages and improving deal accretion, rather than a broad-based demand rebound. The brokerage expects this narrative to hold unless there is fresh macro uncertainty, preferring Tech Mahindra, TCS, KPIT and Zensar within its coverage.

Accenture flagged IDC data showing global AI spending expected to rise from $20 billion currently to $70 billion by 2029. However, management stressed that enterprise AI adoption remains early-stage, requiring significant foundational investments in data, processes and systems.

Both Investec and Jefferies underline that while AI and GenAI projects are increasing, they are largely self-funded, not driving incremental IT budgets. Accenture has also stopped disclosing standalone advanced AI metrics, reflecting how AI is now embedded across services, mirroring trends seen among Indian IT firms.

Citi and Jefferies see Accenture’s unchanged guidance as a key signal. Citi notes that FY26 revenue growth guidance remains at 2–5% YoY, including a 1.5% contribution from M&A, with Q2 guidance also at 1–5% YoY. Organic growth stood at around 4% YoY, while bookings rose just 2% YoY, pointing to a steady but unspectacular demand environment.

Jefferies adds that Accenture typically raises guidance after Q1 once visibility improves. The fact that it did not do so this year suggests heightened uncertainty, increasing downside risk to expectations of a sharp growth acceleration for Indian IT in FY27.

Jefferies notes that Accenture’s deal bookings rose 10% YoY, driven by large transformation deals, with managed services again leading growth. Headcount increased marginally after two quarters of decline, with management guiding for gradual talent addition in FY26.

Still, brokerages agree that this strength supports gradual improvement, not a sharp rebound. Citi flags that Indian IT valuations remain elevated — trading at a premium to the Nifty — despite FY26 shaping up to be the third consecutive low-growth year for the sector.

Across brokerages, the message is consistent:

• Demand is stable but uninspiring

• Discretionary spending remains muted

• AI adoption is growing but not expanding budgets

• Growth recovery for Indian IT is likely to be slow and selective

Jefferies reiterates a selective stance, while Citi advises caution at current valuations, preferring companies with stronger exposure to resilient verticals like financial services.