IT consulting firm Accenture’s quarterly results indicate that while demand remains stable, revenue growth of software outsourcing companies is likely to stay subdued, according to analysts.
Accenture follows a September to August financial year. The Dublin-headquartered company, valued at $297 billion, on Thursday reported a revenue of $18.04 billion for the second quarter of FY26. This was a 4% year-on-year (YoY) increase in constant currency terms, exceeding street estimates.
Analysts and brokerages such as ICICI Securities and Motilal Oswal said the numbers point to a period of stable demand, with no significant uptick in client spending for Indian IT services in the near term.
“Accenture indicated that client spending trends remain similar to 2025. However, we believe the escalating war is an additional variable that is yet unaccounted for in the company’s outlook,” analysts at Motilal Oswal said in a note.
Accenture raised the bottom end of its FY26 (constant currency) revenue growth guidance to 3-5% from 2-5% earlier, excluding a 1% drag from the US federal business. As per Motilal Oswal, it implies an organic growth of 1.5-3.5% compared with 0.5-3.5% in the previous quarter.
The guidance reflected “the company’s best view of the potential impact of the conflict in the Middle East in the second half of this fiscal year. It does not take into account a significant escalation, or the occurrence of major economic disruption,” the company said in its earnings press release.
In addition to stable demand, “AI-led discretionary spend is picking up, and healthy consulting bookings growth indicates Accenture can better capture these spends; this could intensify competition for Indian IT,” analysts at ICICI Securities said.
Consulting revenues rose by 7% YoY while that for managed services grew at 10%, indicating continued traction in outsourcing-led deals, with over 60% of the deals being fixed-priced contracts.
This, according to analysts, increases the focus on margins for domestic IT firms as they move further into AI-heavy and platform-led deals that rely less on linear headcount-based billing.
"The outlook for Indian IT services is not bleak. In fact, it remains cautiously optimistic, but the path forward demands significant transformation and agile execution,” said DD Mishra, vice president and analyst at Gartner.
Growth among verticals was led by financial services and communications and media, which expanded 9% YoY each in constant currency terms.
Its bookings for the quarter stood at $22.1 billion, with outsourcing bookings of $10.78 billion, up 3.3% YoY, while consulting bookings were up 8.2% YoY at $11.33 billion, signalling continued strong client spending.
“If you look at the last 2-3 months, there has been so much narrative about AI disrupting the entire business model of IT companies, but the bookings are there for everyone to see,” said Karan Uppal, vice president and lead analyst for IT services at Phillip Capital. However, the growth in consulting-led bookings signals more seasonality rather than a sustained trend, he said.
Shares of Infosys, Wipro and Tata Consultancy Services rose by as much as 3% on Friday on the National Stock Exchange, before closing with gains between 1.3% and 2.8%.
Accenture follows a September to August financial year. The Dublin-headquartered company, valued at $297 billion, on Thursday reported a revenue of $18.04 billion for the second quarter of FY26. This was a 4% year-on-year (YoY) increase in constant currency terms, exceeding street estimates.
Analysts and brokerages such as ICICI Securities and Motilal Oswal said the numbers point to a period of stable demand, with no significant uptick in client spending for Indian IT services in the near term.
“Accenture indicated that client spending trends remain similar to 2025. However, we believe the escalating war is an additional variable that is yet unaccounted for in the company’s outlook,” analysts at Motilal Oswal said in a note.
Accenture raised the bottom end of its FY26 (constant currency) revenue growth guidance to 3-5% from 2-5% earlier, excluding a 1% drag from the US federal business. As per Motilal Oswal, it implies an organic growth of 1.5-3.5% compared with 0.5-3.5% in the previous quarter.
The guidance reflected “the company’s best view of the potential impact of the conflict in the Middle East in the second half of this fiscal year. It does not take into account a significant escalation, or the occurrence of major economic disruption,” the company said in its earnings press release.
In addition to stable demand, “AI-led discretionary spend is picking up, and healthy consulting bookings growth indicates Accenture can better capture these spends; this could intensify competition for Indian IT,” analysts at ICICI Securities said.
Consulting revenues rose by 7% YoY while that for managed services grew at 10%, indicating continued traction in outsourcing-led deals, with over 60% of the deals being fixed-priced contracts.
This, according to analysts, increases the focus on margins for domestic IT firms as they move further into AI-heavy and platform-led deals that rely less on linear headcount-based billing.
"The outlook for Indian IT services is not bleak. In fact, it remains cautiously optimistic, but the path forward demands significant transformation and agile execution,” said DD Mishra, vice president and analyst at Gartner.
Growth among verticals was led by financial services and communications and media, which expanded 9% YoY each in constant currency terms.
Its bookings for the quarter stood at $22.1 billion, with outsourcing bookings of $10.78 billion, up 3.3% YoY, while consulting bookings were up 8.2% YoY at $11.33 billion, signalling continued strong client spending.
“If you look at the last 2-3 months, there has been so much narrative about AI disrupting the entire business model of IT companies, but the bookings are there for everyone to see,” said Karan Uppal, vice president and lead analyst for IT services at Phillip Capital. However, the growth in consulting-led bookings signals more seasonality rather than a sustained trend, he said.
Shares of Infosys, Wipro and Tata Consultancy Services rose by as much as 3% on Friday on the National Stock Exchange, before closing with gains between 1.3% and 2.8%.
