Accenture (NYSE:ACN) had posted a better-than-expected third quarter and ended May with strength in its outsourcing business. Though the consulting business rebounded during the quarter, chances of sustainable growth look a bit gloomy until discretionary spending in the U.S. improves. But the tech giant is on its toes to boost business growth. Very recently, it received recognition for advancement in the digital platform. It also made an acquisition.
Expanding reach into the oil & gas sector
Accenture plans to take over Hytracc Consulting for an undisclosed sum. Founded in 2010, Norway-based Hytracc has evolved as a renowned consulting firm aiming the oil and gas sector. The company specializes in providing design and implementation solutions that help customers in managing hydrocarbon exploration supply chain.
Hytracc’s "data management and accounting" solutions help upstream oil and gas firms (that are engaged in exploration and production activities) to track, explore, manage and deliver hydrocarbons from within the wellheads to the sales meter stations efficiently. This helps the firms to gain higher returns on their investments.
- Warning! GuruFocus has detected 4 Warning Signs with ACN. Click here to check it out.
- ACN 15-Year Financial Data
- The intrinsic value of ACN
- Peter Lynch Chart of ACN
Accenture already has a broad portfolio serving the energy sector, including upstream, downstream, oil services and clean-energy companies. Acquisition of Hytracc will allow Accenture to expand offerings to its upstream customers.
The consulting and outsourcing bigwig plans to integrate Hytracc within its Resources operating group. Last quarter, the group’s revenue grew 2% year over year driven by higher outsourcing revenues, particularly from the energy sector in the Americas, utilities sector in Europe, Middle East and Africa and natural resources sector in Asia-Pacific. But the group’s business was negatively impacted by weak consulting revenues.
According to a report published by International Energy Agency, investment in energy supply could grow significantly through 2035, especially from Middle East and South American countries. This bodes well for Accenture as its enhanced production management portfolio could attract more deals from upstream firms.
A ‘front runner’ in digital transformation services
Research firm Horses for Sources (HfS) Research, in its report published recently, has recognized Accenture as a "Front Runner" in the digital transformation services category.
Transforming businesses into digital platforms has become a necessity for companies of every size to maximize returns on investments. In a move to think beyond e-commerce and traditional marketing strategies, firms are using digital tools for collecting, evaluating and analysing various business data and transforming them into meaningful decision-making tools.
The Accenture Digital platform was introduced last December to provide a comprehensive solution to cater to the clients’ business as well as technological needs. Accenture combined its mobility, analytics, digital marketing and interactive capabilities into the platform, thus helping firms to formulate digital strategies, and implementing them across the IT system.
The company is acquiring companies to add skills in each of the areas in its digital platform. This April, it acquired i4C Analytics for an undisclosed sum. i4C Analytics provides software platform for advanced analytics that helps in analyzing complex business data. It had also acquired Acquity, evopro group and Fjord last year to boost digital marketing as well as software development capabilities.
The growth of digital business will be closely related with the increasing demand for "Internet of Things"– a technology that connects all earthy devices to make communications better. As per IT research firm Gartner, billions of people and devices will be connected through Internet of Things. This will help digital business to grow quickly. Experts believe that the digital business could disrupt the existing business conditions as well as company executives. Specialist IT services firms will help businesses smoothly shift onto the digital platform.
With a broad portfolio, Accenture looks well-positioned to monetize the opportunity.
If plans to acquire Hytracc Consulting go through, Accenture would have a broader production management portfolio for upstream firms. The company’s broader exposure in the digital transformation services category, and plans of future takeovers to further cement its position, show that Accenture is moving with the times and putting in all the effort to stay ahead.