Accenture Wins $750M Gov't Deal (revised) - Analyst Blog


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Accenture ( ACN ) was recently chosen as one of nine prime contractors for a $750 million Development, Modernization, and Enhancement (DME) contract from The Department of State. The government body awarded the contract to Accenture Federal Services, which will be responsible for technical and consulting support to the Bureau of Consular Affairs. This contract has a one-year base period with four one-year renewal options.

This order has been placed by the DME to modernize technologies and also to enhance its visa processing facility and passports renewal facility, at the same time managing the Office of Overseas Citizens Services that helps citizens to find their lost passports.

Government deals have always been a strong point for Accenture. The company has recently been awarded a contract by the State Department of the Japan government to analyze the supply chain process and to offer new solutions that will enhance its logistic management system. Thus, the new and renewed government orders continue to help the company and increase its business volume.

Previously, the company won a management consulting contract from Japan's Ministry of Agriculture, Forestry and Fisheries, for an undisclosed amount.

Moreover, in July 2012, Accenture offered its Electronic Health Record (EHR) system to Madrid Heath Service. Accenture has been working with Madrid Heath Service since 2002, to develop a comprehensive system for recording all possible data related to patients, and thereby improving the regional healthcare system.

Apart from winning new deals in consulting, the company is constantly witnessing improvement in demand for its BPO services, especially in the Financial Services and healthcare segments. Within the BPO vertical, the U.S. has registered maximum growth. Weakness in Europe has also benefited Accenture, forcing the companies in that region to consider outsourcing to reduce labor costs. However, this might take some time to implement.

We are encouraged by the steady flow of new businesses and believe that the trend will continue. However, increasing competition from IBM Corp. ( IBM ) and a strained spending environment may curb its growth prospects to some extent.

Currently, Accenture has a short-term Buy recommendation, denoted by the Zacks #2 Rank.

(We are reissuing this article to correct a mistake. The original article, issued earlier today, should no longer be relied upon.)

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