Accenture Develops R&D in China - Analyst Blog

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Accenture plc ( ACN ) is keen on spreading its wings in Asia. The consulting and outsourcing solutions provider has developed a new research and development (R&D) lab in Beijing, China, further strengthening its long-standing tie with China.

China is over populated, resulting in limited availability of resources that places several challenges before the country's firms as well as government. The R&D facility will help Accenture monitor the country's information technology ( IT ) needs and deliver innovative solutions to meet those requirements economically. The company has formed a local team, including scientists and researchers, to give shape to its vision. Expertise thus culled by the company will help local business firms achieve scalability and efficiency.

We see this as a smart move by Accenture. With the west facing threats of a double-dip, all eyes are now turned toward Asia. With the continuous emergence of hi-tech innovations, it is obvious that technology services, outsourcing and consulting services will be in demand.

Back home, there is a good chance of a reduction in the IT spending budgets. Recently, the U.S. President announced that government spending on IT will be reduced by 1.2% in 2013. As Accenture draws a steady stream of revenue from Fed deals, we believe that it could be affected by the government's decision. Accordingly, we are hopeful about Accenture's Asian expansion.

Though Accenture's Asian prospects look bright, increasing competition from IBM Corp. ( IBM ), a strained spending environment and its broad European exposure may temper growth to some extent.

Currently, Accenture has a short-term Hold recommendation, denoted by the Zacks #3 Rank.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ACN , IBM , IT

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