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ICICI Securities Report
We have seen a mild shift in Accenture Plc's tone from aggressive demand for digital transformation to focus on cost-optimisation by clients, across IT services companies in the previous earnings call. The management also cited during their analyst day in April 2022 that 'cost agenda is back as clients try to regain competitiveness in this inflationary environment.'
Macro-economic issues – high inflation, volatile energy prices, supply-chain disruptions, decelerating consumer spend in developed markets – have deteriorated in past three months.
Weak macro has started impacting client spend as seen in:
elongation of deal cycles for software-as-a-service players (Salesforce, ServiceNow, Workday, Hubspot) as tech spends go through further scrutiny amid clients re-assessing their budgets;
Adobe, Hubspot and Salesforce reduced their revenue guidance factoring-in the uncertain demand environment;
Seagate management commentary that certain U.S. cloud service providers are exhibiting more cautious purchasing behaviour; and
deceleration in hyperscalar revenue growth for past two quarters.
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