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Accenture’s Good News/Bad News Scenario

Accenture got integrator earnings announcements off to a healthy start last week, when it posted fiscal first-quarter revenue of $3.73 billion—the highest quarterly production ever at the company. Amid the numbers, Accenture discussed its staffing situation. Rising demand for services has created what the company calls “short-term staffing inefficiencies.” The human resource situation contributed to […]

Written By: John Moore

Jan 10, 2005

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Accenture got integrator earnings announcements off to a healthy start last week, when it posted fiscal first-quarter revenue of $3.73 billion—the highest quarterly production ever at the company.

Amid the numbers, Accenture discussed its staffing situation. Rising demand for services has created what the company calls “short-term staffing inefficiencies.” The human resource situation contributed to a “temporary spike in the cost of services,” said Steve Rohleder, Accenture’s chief operating officer.

It’s been a while (1999 perhaps) since staffing shortfalls have bothered integrators. And it wasn’t too long ago that the Information Technology Association of America reported only a slight increase in IT employment based on its analysis of early 2004 data.

“Accenture’s experience may be anecdotal evidence of a tightening labor market and fits with our general sense that the pace of business in the IT sector improved significantly through 2004,” said Harris Miller, president of the ITAA.

More anecdotal evidence of improved labor health comes from DiamondCluster International, which late last year reported an expansion of on-campus recruiting.

In general, the hiring outlook improved over the course of the year. According to Labor Department numbers, 2.2 million workers were added to the nation’s payrolls in 2004. Some published reports deemed that the best job-creation performance in five years.

It remains to be seen whether Accenture’s case will come to be viewed as typical or anomalous. In the meantime, the company is taking steps to address its human resource issues. Rohleder says the company has identified its “key resource gaps” and launched a 30-day review of all contracts in excess of $50 million “to ensure staffing compliance.”

In addition, Accenture has boosted recruiting resources by 10 percent. The hiring, however, already has kicked in. The company saw a net head count increase of 3,000 in the company’s November-ended first quarter.

Overall, Accenture wants to grow head count in the 15 percent to 20 percent range during fiscal 2005, according to Bill Green, the company’s CEO. But in addition to attracting new recruits, the company must retain personnel. Rohleder says the company’s attrition rate stabilized at 20 percent in the first quarter, but adds the goal is to drive down that rate to the high teens.

The demand behind Accenture’s 85 percent Q1 utilization rate appears to be broadly based. The company reported revenue growth for all five of its operating groups and three geographic areas. Financial services led operating group growth at 25 percent. The Europe, Middle East and Africa group paced Accenture’s geographic regions with 24 percent growth.

In services, consulting revenue grew 14 percent in Q1, the strongest year-over-year expansion since Accenture’s launch in 2001, Green says. Outsourcing was up 15 percent. Green says that the outsourcing growth rate is likely to slow this year.

The company’s hiring efforts, meanwhile, show no signs of slowing.

Accenture’s Good News/Bad News Scenario

John Moore

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