Dallas, Texas 04/02/2014 (FINANCIALSTRENDS) – As the crisis in Ukraine, continues to take toll on the geopolitical-scene at play in Europe, “new business opportunities” in the global outsourcing hub grow at a sluggish rate. Accenture will suffer worst as Consultancy business suffers from lagging discretionary spending.
Accenture Plc(NYSE:ACN)’s revenues may suffer more from declining demand and constrained spending in the European region and elsewhere among the developing nations. Despite an anticipated growth in IT spending by 4.5% this year, European corporations are less likely to spend more on discretionary services like IT consulting in the aftermath of the Ukrainian crisis. Share prices which have already corrected after a dismal earnings report for the recent quarter, continue to struggle against downward push.
Ukraine Slows Down Europe & Developing World
The Russian invasion into its neighboring terrain has resulted in liquidity drain from the US and the Uk. The effect has rippled downstream to the developing countries where government bond’s sales declined by 23% in the first quarter of 2014, despite a record high take-off in the beginning of the year. Almost 40% of the company’s, quarterly revenues came from Middle Eastern and European markets.
European Demand Victimizes BPO Sector Sales
Accenture’s top performing product, “outsourcing business”, may show lackluster performance as markets in UK, Spain and France rebound at a slower than expected pace. The news is worse than it seems because Accenture is looking to develop a duopoly leadership in the outsourcing sector with International Business machine Corp. (NYSE:IBM). Per the latest pre-crisis, estimates the global outsourcing industry was expected, to grow at a CAGR of 18% in the coming year. If Procurian’s acquisition is correctly leveraged the procurement process outsourcing will be the key driver of growth in this segment.
Consulting Services May Suffer From Low Cost Competition
Owing to decline in discretionary spending and greater competition from off-shore IT service providers from India Accenture Plc(NYSE:ACN)’s IT consulting and the application services segment will be the hardest hit from demand cull in Europe. The bread earner for Accenture’s has already been facing greater challenges for over the last two years now.
The company may see a flat to slightly positive skew in the new order line up from the Industrial undertakings in North American and the public sector technology implementation partnerships.