Accenture Wins Shell Contract - Analyst Blog

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Software and consulting major AccenturePlc . ( ACN">ACN ) recently won a contract from oil major Shell. As per the agreement, Accenture will provide application maintenance services to Shell to support the company's SAP-based HR and payroll systems across the globe.

The multi-year outsourcing contract signed by the company encompasses different functional areas such as employee administration, self-service, environmental health and payroll.

The maintenance services offered by Accenture include preventative maintenance, change management, data archiving and also management documentation. Application support services include service desk support, incident resolution and user access management, application operations and monitoring, as well as technical support.

This apart, the tech major has recently won another deal worth $71.0 million from the U.S Department of Homeland Security. Per the deal, Accenture will be responsible for further enhancing the capabilities of its immigration and border management functions. This new deal involves the upgrade of the system adopted by the United States Visitor and Immigrant Status Indicator Technology (US-VISIT), which supplies information to other U.S. Department State, Customs, Immigration and Coast Guard.

Accenture's industry expertise has facilitated a number of deal wins across various industrial sectors, geographical locations and governments. The steady demand for its cloud computing, virtualization, systems integration, enterprise resource planning and other application services has helped the company generate four consecutive quarters of double-digit sales and earnings growth.

Some of the industry experts believe thatACN's booking and consulting segment has performed well over the past few quarters. Some analysts also believe that management consulting demand will remain healthy going forward, despite being driven by a shift in client demand for cost take-out. Moreover, the company is still not witnessing any abnormal delays,cancellations , or sales cycle issues.

On the other hand, IT spending growth is expected to be 3.7% in 2012, down from 4.6% in 2011. The downside is primarily due to the uncertain global economy, euro zone sovereign debt crisis and the hardware supply chain disruption arising from the floods in Thailand last year. This will likely weigh on the growth prospects of the company going forward.

Considering all theabovementioned factors, Accenture seems to be growing modestly. The company also stated that it will continue to invest in priority industries (such as Communications) and emerging markets, where it will focus on building its brand value. We believe that the company's confidence in adopting such a strategy in the back drop of lingering global concerns is powered by its five consecutive quarters ofoutperformance .

We are encouraged by the steady flow of new business and believe that the trend will continue. However, increasing competition from IBM Inc. ( IBM ), a strained spending environment and Accenture's broad European exposure may temper its growth prospects.

Currently, Accenture has a short-term Hold rating, as denoted by theZacks #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.



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