Come loose money with me. Accenture is under significant pressure .
Recent Q3 report; signalled low booking growth and an overweight of low margin and long time horizon contract. The market is now viewing Accenture as a stagnating conglomerate. The discrepency between the low pe and the sentiment regarding the stock, is furthermore driven by toxic workplace culture, wage inflation and a disruption in the business model – whereof AI has been fundamentally changing the market.
Consultancy is no longer hourly based – it is output based. This has had a negative effect on the pricing; in favour of customers.
Nonetheless looking at the perceived customer value – consultancy is not going anywhere. There will for the foreseeable time be a need for an skilled workforce – with strong capabilities. In fact lowered prices, have increased bookings in the mid tier segment. Margins might come down – but hey, at least sales are up.
The excessive share buy backs and inorganic growth – hints at a lack of organic growth opportunities. Note – ACN is investing in their employees; up scaling them to better fit future demand [data architecture].
Contrary to common belief – India does provide … The manoeuvrability of Accentures workforce rests on its low retention rate.
So point is – is the current valuation an overreaction; or is Accenture now a stagnating business? Will the use of AI; allow higher % skill consultancies to capture market share as efficiency grows?
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