Accenture has highlighted booming Gen AI business in its second quarter even as its US government revenues wobbled following the change of ownership in Washington DC.
But the firm also said that its clients’ adoption of Gen AI was mirroring similar tech waves in the past.
The consultancy giant turned in total revenues of $16.66bn for the second quarter ending February 28, up 5% on the year. Net income was $1.8bn, a 10.9% bump on the year.
While new bookings were $20.9bn, down 3%, the firm chose to emphasis a surge in Gen AI related work.
CEO Julie Sweet told analysts, “We had another milestone quarter in Gen AI with $1.4bn in new bookings and approximately $600m in revenue.” CFO Angie Park said growth in managed services was driven by “double digit growth in technology managed services.
It was training its own people and aiming to “reinvent” its own services using Gen AI Sweet continued. “We increased our data and AI workforce to approximately 72,000, continuing progress against our goal of 80,000 by the end of FY 2026.”
“In H1, we did $1.1bn in [Gen AI] revenue, and last year, in FY ‘24, we did $900m for the entire year. So you're starting to see the leadership that we have in Gen AI really come through on the revenue side.
There’s more to technology than just AI of course. Sweet said clients saw their digital core as the foundation for reinvention “and [are] increasingly asking us to incorporate emerging technologies like AI, as well as data into this work. Cloud saw double-digit growth this quarter and security had very strong double-digit growth.”
She reeled off examples of how it is helping customers exploit Gen AI, such as a multinational food processing company reinventing itself as a data driven organization, using Accenture’s AI library and Gen AI assets, “With the potential of generating over $0.5bn in value to self-fund their reinvention”
That included “next best action” processes aligning forecasts and production, “In another instance, an AI-based communication platform was deployed that eliminates up to five different language barriers between supervisors and frontline workers in plants, reducing costly errors from miscommunications and delays.”
Interestingly, while Sweet highlighted the impact of Gen AI, she resisted the temptation to say, “it’s different this time.”
Asked if Gen AI was changing the economic relationship with customers, she said its contracts assume technology will drive more efficiency.
“Gen AI is allowing that to kind of go up over time,” she explained. “But like the way that the model is working is just very similar to what we've seen with prior waves of big efficiencies from technology. So, we're not seeing new patterns evolve there.”
While GenAI was surging, Sweet said that existing economic and geopolitical uncertainty had ticked up recently.
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And she acknowledged the impact of the change of ownership in Washington. Federal business represented approximately 8% of its global revenue and 16% of Americas revenue in its previous year.
“As you know, the new administration has a clear goal to run the Federal government more efficiently,” she said. Thas meant slowing procurement “Which is negatively impacting our sales and revenue.”
At the same time, the GSA had told agencies to review their contacts with the ten biggest consulting firms and terminate those deemed not mission crucial.
“While we continue to believe our work for federal clients is mission critical, we anticipate ongoing uncertainty as the government's priorities evolve and these assessments unfold.” But, she added, it also time “major opportunities over time” to help the government run at a “whole new level of efficiency”.
