Accenture, an Indian IT bellwether? Scale, structure, and AI demand more nuance

Its shares dropped 7% on 20 June on the New York Stock Exchange. When Indian markets opened on 23 June, the market reacted sharply: the Nifty IT index fell 1.8% intraday, with Infosys, HCL Technologies, TCS and Wipro falling between 1.1% and 2.5%.

The reaction reflected more than just short-term sentiment. Accenture is widely seen as a bellwether for Indian IT services firms. One reason is the timing. Accenture reports earnings ahead of its Indian peers by two to three weeks, offering early signals on demand trends, especially in North America and Europe. Investors and analysts use Accenture’s performance metrics—particularly new bookings, revenue by vertical and guidance—to model and forecast demand for the Indian IT sector. A strong or weak showing directly influences the tone of the upcoming earnings season.

The close linkage also comes from overlapping revenue streams and customer segments. Both Accenture and Indian IT firms derive a bulk of their revenues from North America and serve similar Fortune 1,000 clients across sectors like banking, financial services, insurance (BFSI), manufacturing, and technology. BFSI alone contributes 30-40% of revenue for both. This shared exposure means that shifts in Accenture’s bookings are often read as indicative of broader trends affecting the Indian IT industry.

Scale advantage

While benchmarking Accenture against Indian IT firms offers useful insights, it merits some caution. The most obvious difference is scale. In their respective latest quarters, Accenture reported $17.7 billion in revenue, which was a multiple of TCS ($7.5 billion) and Infosys ($4.7 billion). This size advantage gives Accenture more room to invest, a stronger brand, and a better chance at winning large, complex transformation deals.

There are also structural differences. Consulting made up more than half of Accenture’s revenues in Q3. This allows it to lead from the start in enterprise transformation projects, often working directly with the C-suite. Indian IT firms, while expanding into this space, still rely more on managed services and cost-efficiency contracts. This is reflected in deal sizes. Accenture signed 92 deals of over $100 million each in the first three quarters of fiscal 2025. In contrast, Indian firms often classify deals over $30 million as ‘large’, underscoring a clear gap in scale and positioning.

Structural gaps

Other structural differences also shape how these firms operate. One is profitability. Indian IT firms typically report higher operating margins: 21-26% for TCS and Infosys, 18% for HCL Technologies, against 16-17% for Accenture. This gap stems from workforce strategies. Indian firms maintain a larger share of their employees in low-cost offshore centres, primarily in India, which helps control delivery costs. Accenture, in spite of having about 47% of its workforce in India, has a more globally distributed employee base, especially in high-cost markets.

Another key difference is exposure to US government contracts. Accenture derives about 8% of global revenues from this segment, making it more sensitive to public-sector spending cycles. Indian IT firms have little to no exposure here. As a result, federal budget tightening, as seen under the Trump administration, can directly weigh on Accenture’s growth, without affecting its Indian counterparts. In the most recent quarter, Accenture attributed a drop in bookings to government contracts.

AI priorities

Going forward, AI could play a bigger role in how investors and analysts approach benchmarking. It is becoming a core differentiator in the IT services industry, moving from niche applications to enterprise-wide transformation. All major players are scaling up their capabilities. In the first nine months of FY25, Accenture reported $4.1 billion in new GenAI bookings and $1.8 billion in revenue from these services. It is also reorganizing its operations under a new ‘reinvention services’ unit to deliver AI-led solutions more seamlessly.

Indian IT firms have also taken steps beyond workforce training. TCS has launched its WisdomNext platform and is embedding GenAI across its offerings. Infosys is expanding its Topaz suite with a growing base of AI assets. The progress they make in these areas will matter more. As global tech spending resets and AI takes centre stage, Accenture’s quarterly numbers may remain a reference point, but not the full story.

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