Synopsis:
Accenture’s Q4FY25 results indicate cautious optimism for Indian IT, driven by strong Financial Services growth, robust Managed Services demand, and expanding Generative AI opportunities.
The recent Q4FY25 results from Accenture, a global consulting and IT services leader, are set to influence sentiment in the Indian IT sector, which has significant exposure to Financial Services.
Accenture’s Financial Services vertical delivered its strongest performance, growing 12 percent year-on-year in constant currency terms, while Managed Services bookings outpaced consulting, reflecting continued client focus on cost optimization.
Brokerages including Macquarie, Citi, Jefferies, Nomura, Investec, and Goldman Sachs have shared their perspectives on the results, highlighting opportunities from Generative AI alongside potential headwinds from regulatory trends and discretionary spending patterns.
Brokerage Views
Macquarie highlighted that Accenture’s Financial Services vertical led growth with a 12 percent YoY rise in constant currency terms, noting that Indian IT firms, especially TCS, have significant exposure to this segment.
Managed Services performing better than consulting indicates that clients continue to prioritize cost reduction initiatives. Macquarie views TCS as a marquee buy and expects substantial margin expansion and a growth pickup by FY27, which could support a re-rating of valuations.
Citi observed that Financial Services remains the key growth driver, with Indian IT companies heavily exposed in this segment. Generative AI pricing is expected to positively contribute to Accenture’s overall average, and commentary from Indian IT firms will be closely watched.
However, Citi remains cautious on the sector due to AI disruption, the GCC trend, heightened competition, and emerging US regulatory risks, projecting FY26 to be the third consecutive low-growth year for the industry.
Jefferies warned that Accenture’s muted growth guidance could weigh on Indian IT, as organic revenue growth in FY26 signals a steady to moderating trajectory. Despite increased GenAI project activity, these initiatives are not yet translating into higher IT services budgets, which may challenge consensus expectations of a growth acceleration in FY27. The brokerage maintains a selective stance on the sector.
Nomura noted that Accenture’s FY26 revenue guidance factors in a negative 1–1.5 percent impact from its US federal business, a segment in which Indian IT companies have no exposure. Revenue momentum continues to be strong in Financial Services, with no major change in the macroeconomic environment.
GenAI opportunities are maturing gradually, with bookings for Indian IT firms rising from $3 billion in FY24 to $5.9 billion in FY25. Nomura emphasized that a sharp growth revival would depend on broader macroeconomic improvement, particularly in the US.
Investec stated that Accenture’s results do not signal any negatives for Indian IT, highlighting an acceleration in demand compared with the prior year. The lower end of guidance assumes a deterioration in discretionary spending, while the upper end assumes no change.
Goldman Sachs indicated that Accenture’s results suggest a largely unchanged discretionary demand environment. For Indian IT, expected revenue growth for the 12 months ending September 2026 is 3.6 percent, broadly in line with Accenture’s FY26 guidance.
FY27 full-year growth of 6.1 percent could be at risk if discretionary demand does not improve. Accenture’s top-end guidance assumes no change in the discretionary demand environment, with strong momentum in bookings and Generative AI adoption remaining non-deflationary. While growth in the Americas is decelerating, the Financial Services vertical continues to perform robustly.
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Outlook
Overall, Accenture’s results provide a cautious yet constructive signal for Indian IT companies. Strong performance in Financial Services, continued momentum in Managed Services, and gradually maturing GenAI opportunities suggest stable near-term demand.
However, growth acceleration will likely remain dependent on discretionary spending trends and macroeconomic improvements, particularly in the US, while Indian IT firms navigate intensifying competition and regulatory developments.
Written By Manan Gangwar
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