IT service provider Accenture has announced impressive achievements in the field of Generative AI in fiscal 2024.
However, despite the company’s offering in AI services, its overall revenue growth appears disconnected from the broader AI boom. Accenture’s revenue target also does not reflect AI demand.
AI spending booms
The market for AI-related hardware and software is expected to grow between 40 percent and 55 percent annually, reaching between $780 billion and $990 billion by 2027, according to report on AI business from Bain & Company.
The latest IDC report says spending on AI will reach $632 billion in 2028 as AI-powered transformations have delivered tangible business outcomes and value for organizations.
“Enterprises are building their AI strategies around employee experience, customer engagement, business process, and industry innovations,” said Ritu Jyoti, group vice president and general manager, AI and Data Research at IDC.
AI booking
Accenture reported $1 billion in AI-related bookings for the fourth quarter and $3 billion for the fiscal year 2024.
For fiscal-year, Accenture’s total bookings have reached $81.2 billion, registering 13 percent growth. For the fourth-quarter, Accenture’s total bookings surged to $20.1 billion, reflecting a 21 percent rise.
Accenture’s AI booking represented 3.69 percent of the total booking in fiscal-year and 5 percent in Q4.
Despite these record-breaking bookings, Accenture’s revenue for the fourth quarter grew by only 3 percent, reaching $16.4 billion. Full-year revenue for fiscal 2024 was $64.90 billion, up just 1 percent from the previous year.
Accenture’s sector-based performance highlights areas of concern: Financial Services revenue dropped by 5 percent, and Communications, Media & Technology revenue fell by 2 percent. While Health & Public Service saw 10 percent increase, this was not enough to significantly boost the company’s overall growth.
Looking ahead, Accenture projects revenue growth of 3 to 6 percent for fiscal 2025, indicating that while the company is capitalizing on the AI trend, it is not yet translating to the double-digit growth that the AI boom might suggest.
Julie Sweet, Accenture’s chair and CEO, acknowledged the transformative potential of Generative AI, calling it the most transformative technology of the next decade. However, the company’s broader revenue growth remains muted, with its AI momentum yet to fully reflect in its financial results.
The gap between Accenture’s AI-driven bookings and its modest revenue growth points to the challenge of translating emerging technology initiatives into accelerated business performance. Despite leading in AI, Accenture’s full-year financial growth still lags behind the tech industry’s broader enthusiasm for AI-driven innovation.
Baburajan Kizhakedath
