Accenture Wins $750mn Gov't Deal - Analyst Blog


Accenture ( ACN ) recently won a $750 million Development, Modernization and Enhancement (DME) contract from The U.S. State Department. 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 for 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.

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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

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