MUMBAI (NewsRise) -- Accenture's second-quarter earnings augur well for Indian software exporters as strong demand for outsourcing services outweighs concerns over the coronavirus pandemic that has hammered major Western markets.
On Thursday, Accenture reported a 9.8% increase in its second-quarter profit, but slashed its revenue growth forecast for this year to 3%-6%, from 6%-8%, citing the coronavirus pandemic that is raging across the world. The company reported a 22% jump in new order bookings.
The lion's share of the growth for Accenture came from outsourcing services, which typically entails managing the technology infrastructure of clients and running their back offices -- a major growth driver for Indian software exporters.
"Accenture's February quarter performance is perhaps the first quantitative data which came out post the start of coronavirus disruption in Asia-Pacific in late December," brokerage Motilal Oswal Group noted in a report on Friday. Analysis of Accenture's geographical growth rates, employee utilization rate and new outsourcing deal wins suggest it has suffered "no damaging disruption" so far due to the virus outbreak, the brokerage said.
The coronavirus pandemic, which began late last year in China, has wreaked havoc across continents as businesses have been forced to close and countries resorted to emergency lockdowns to contain the spread. The virus has so far infected about 245,000 people and killed more than 10,000.
Accenture's revised outlook and commentary around demand and supply were "encouraging," especially in the context of the alarming increase in virus-infected cases in major markets like the U.S., the U.K., and Europe, Motilal Oswal said. "This should partly calm the nerves of Indian information technology investors about the potential disruption to operations, business continuity, and new deal wins."
More than 13,000 people in the U.S. have tested positive with the illness, while more than 200 people have died. In Europe, Italy has become the new epicenter of the virus, with 3,405 people dead from the infection -- more than the figure in China, where more than 3,200 people have died.
The outbreak has sent global financial markets into a dizzying spiral, with the U.S. Federal Reserve forced to cut its key interest rate by 100 basis points on Sunday -- its second emergency reduction in less than two weeks.
Shares of top Indian software exporters Tata Consultancy Services, Infosys and Wipro have lost 17%, 20% and 27%, respectively, in Mumbai trading since the beginning of this year. The benchmark BSE Sensex is down more than 27% so far this year.
On Friday, TCS shares rose 9.9%, while those of Infosys and Wipro gained 7.3% and 10.1%, respectively. The benchmark BSE Sensex index gained 5.8%.
"Overall, Accenture's result read-through is positive for other IT companies on providing framework, and lending comfort on business continuity," Kotak Institutional Equities said in a report. On the negative side, a steep correction in the near-term growth rate is to be expected, the brokerage added.
--Dhanya Ann Thoppil