Motilal Oswal Remains Cautious On Indian IT After Accenture Q2 Results — Here's Why

Recent macroeconomic and geopolitical factors, including tariffs and consumer sentiment shifts, have introduced added uncertainty.

The federal govt. accounted for 8% of global revenue and 16% of Americas revenue in FY24. Efficiency programs by the new administration have led to a slowdown in procurement actions, which is hurting sales

Recent macroeconomic and geopolitical factors, including tariffs and consumer sentiment shifts, have introduced added uncertainty.

The federal govt. accounted for 8% of global revenue and 16% of Americas revenue in FY24. Efficiency programs by the new administration have led to a slowdown in procurement actions, which is hurting sales

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Motilal Oswal Report

Accenture Plc. reported Q2 FY25 revenues of $16.7 billion, up 8.5% YoY constant currency (~5.5% organic YoY CC terms), near the upper end of the guided range of 5% to 9%. Accenture has narrowed its revenue growth guidance to 5-7% CC (from 4-7% CC) for FY25 (~2-4% organic YoY CC).

Accenture's top end of the guidance (unchanged) bakes in no recovery in discretionary spending. The results reinforce the cautious sentiment around discretionary spending in IT services, which remains constrained, particularly for smaller deals.

As we argue in our March 11, 2025 report, the expectation that discretionary spending would revive in areas like US Banking, Healthcare, and Hi-Tech due to factors such as rate cuts, a business friendly administration, and pre-GenAI spending has not fully materialized, as the landscape over the past six months has shifted—US rate cuts appear less imminent, and geopolitical/tariff risks have introduced new uncertainties for enterprises in the US and Europe.

Accenture's commentary suggests that clients remain focused on cost efficiency and large-scale transformation rather than incremental IT services spending.

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