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Accenture Awarded 2 Year Contract - Analyst Blog

Posted
2/19/2013 5:40:00 PM
By: Zacks.com
Referenced Stocks:ACN;HPQ;IBM;IT

Accenture Plc ( ACN ) has been awarded a two-year contract. As per the terms of the agreement, the company will deliver consulting services targeted at enhancing the existing healthcare IT systems from the Madrid Health Authority. As per this new contract, Accenture will help Madrid's public healthcare network that serves the city's 6.5 million citizens.

Accenture will support Madrid Health Authority to expand the integration and functionality of its healthcare technology systems to over 36 hospitals, which include 29 specialized treatment centers along with 400 primary care facilities. As per the contract, Accenture will take on an advisory role and be involved in full time project management, and thus support Madrid Health Authority's technology systems.

This latest project will capitalize on the previous work between Accenture and Madrid Health Authority. It will also help the healthcare company achieve its business goals and help citizens with a cost effective healthcare solution.

Over the past decade, Accenture has scored a number of wins in the government segment. However, the company is now focused on deals with better margins. A series of contract wins, at the beginning of 2013 is certainly a good start for Accenture. Apart from Accenture, IBM ( IBM ) and Hewlett Packard Company ( HPQ ) have also started aggressive marketing to grab a major chunk of the healthcare market.

The healthcare industry is growing rapidly and offering different employment and business opportunities. A recently-published report from the Bureau of Labor Statistics suggests that December was a huge hiring month for healthcare, with the addition of 45,000 healthcare jobs.

This apart, about 30.0%, or one-third of the nation's total December job growth (to a total of 155,000 jobs) was in the healthcare industry.  The growth in the industry is a positive for a leading technology provider such as Accenture, which may be expected to capitalize on the opportunity.

On the other hand, we remain concerned about the federal budget cut. IT research firms, Gartner Inc. ( IT ) and IDC anticipate government spending on IT to decline in 2013. This could reduce the amount of deals and eventually put pressure on Accenture.

However, we are optimistic about Accenture's broad industry exposure as this could mitigate weakness in government spending. Currently, Accenture has a Zacks Rank #3 (Hold).



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