With $1 billion in generative AI (Gen AI) bookings in the quarter that ended in August, Accenture Plc, the largest software services firm in the world, increased the overall order value in the segment to $3 billion for the entire year (September to August).
Despite a sequential revenue reduction, this growth indicates growing interest in the new technology despite businesses’ reluctance to use it.
The Dublin-based company’s $81.2 billion in order bookings for the year included 4% from Gen AI projects overall, a 12.5% rise from the previous year.
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When Accenture won $100 million in pure-play Gen AI contracts in the quarter last year, it became the first software services company to disclose the transaction value generated from the technology. Native IT service providers have not yet disclosed how much money pure-play Gen AI projects will bring in or provided a roadmap for the emerging technology.
Accenture disclosed Gen AI project spending for the first, second, and third quarters of $400 million, $650 million, and $900 million, respectively.
With the release of Chat GPT in November 2022, Gen AI became a topic of public discussion. The new technology gained notoriety for producing written, audio, and video material quickly with just a prompt.
Analysts point out that despite Accenture’s impressive Gen AI bookings, the technology is still having difficulty progressing past the proof-of-concept stage and finding broad real-time usage.
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The software services industry grew slowly last year as Fortune 500 corporations refrained from spending on technology due to concerns about the macroeconomic environment. Accenture missed its growth expectations and ended the year with $64.9 billion in sales, up just 1.24% from the year before as the market for software services slowed. The company’s revenue fell to $16.4 billion in the August quarter, a sequential decline of 0.6%.
With further economic challenges taken into account, Accenture projects modest full-year revenue growth of 3-6% for the year ending in August 2025, indicating a cautious stance. According to analysts, the company’s cautious approach is reflected in this guidance.
In a note dated September 26, BMO Capital Markets analyst Keith Bachman stated, “In addition, the guide at the high end implies a steady macroeconomic backdrop while the low end of the guide has room for deterioration in the macro backdrop.”
Sweet raised worries even though analysts may have been encouraged by the US Federal Reserve’s interest rate reduction to believe that demand for software services spending would rebound.
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According to Bachman of BMO, clients would merely reprioritize their spending due to the impact of artificial intelligence.
With over 774,000 workers at the end of the year, Accenture hired 24,000 more workers in the most recent quarter. According to Sweet, a large portion of this hiring comes from India, and the business hopes to increase its hiring there without giving a specific figure.
