Global consulting and IT services giant Accenture reported 1 per cent annual revenue growth in constant currency (CC) terms in first quarter of 2024, slightly surpassing expectations and maintaining its FY24 revenue growth guidance of 2-5 per cent in CC terms.

While the company exhibited strength in good deal bookings, especially in outsourcing, a cautious outlook for second quarter has raised near-term concerns for IT industry, among analysts and market participants for the IT sector.

Accenture's managed services revenue grew by 5 per cent YoY CC, albeit at the slowest pace in the last 12 quarters, while consulting services witnessed a decline of 2 per cent in CC terms. The company's FY24 margin guidance remains within the range of 15.5-15.7 per cent.

The company reported positive trends in employee additions and attrition rates, adding 10,000 employees in first quarter. Attrition moderated significantly by 200 basis points annually and 300 basis points sequentially, and utilisation rates stabilised at 91 per cent.

Accenture's optimism regarding the growth potential of managed services, evident from robust bookings, provides some comfort for IT services companies eyeing FY25. However, the continued weakness in Communication, Media, and Technology (CMT) sectors remains an overhang on firms like Tech Mahindra, Motilal Oswal said.

The company's commentary highlighted ongoing weakness in discretionary spending, affecting consulting services. The macroeconomic headwinds continue to influence decision-making and deal scrutiny, resulting in slower revenue conversion for small-size deals. However, large deals execution remains strong, brokerage firm Motilal Oswal noted.

Accenture's emphasis on Generative AI is gaining traction, with approximately 300 projects generating $450 million in revenue in first quarter. The management remains optimistic about the implications of Generative AI, stressing ecosystem partnerships, talent, responsible AI practices and AI integration across industries.

Accenture's first quarter results reflect steady demand in a consistent environment, though concerns about near-term weakness persist. The company's performance and outlook provide valuable insights for industry stakeholders navigating through evolving market dynamics, Motilal Oswal said.