Factors driving outsourcing revenue
Accenture’s (ACN) outsourcing revenue, which constitutes nearly 47% of its overall revenue, has continued to produce solid revenue growth in the last five quarters. The company’s signing of new deals coupled with increased demand for digital, cloud, and security-related services from its clients has resulted in strong growth in its outsourcing business.
All of Accenture’s operating segments have continued to generate strong revenue growth in the last five quarters, thereby driving its outsourcing business.
In the graph above, we can see the revenue growth of Accenture’s outsourcing business over the last five quarters. It’s clear from the chart that the business has maintained a rising revenue trend. During the period, the company’s outsourcing revenue has risen at a CAGR (compound annual growth rate) of 2.6%.
Outsourcing revenue and net bookings trend
Accenture’s outsourcing revenue climbed 10.6% YoY (year-over-year) to nearly $4.3 billion in fiscal 1Q18. However, on a local currency basis, its revenue rose 9% on an annualized basis in fiscal 1Q18 compared to the previous year’s quarter. In fiscal 2017, the ~$16.1 billion worth of revenue the company garnered from its outsourcing business reflected a rise of 7.2% YoY. In the last three years, its revenue has improved at a CAGR of 4.1%.
The outsourcing business has also generated healthy net bookings growth in the last five quarters. During the period, bookings have risen at a CAGR of 4.2%. The business’s net bookings in fiscal 1Q18 came in at $4.1 billion compared to $3.4 billion in fiscal 1Q17.
In order to boost its outsourcing business, Accenture has also formed a strategic alliance with software giants such as Microsoft (MSFT).