BFSI and healthcare to lead Indian IT recovery as bellwether Accenture upgrades FY25 outlook

Global professional services company Accenture announced its Q1FY25 results on Thursday, reporting a 9 per cent revenue increase that exceeded its guided range of 3-6 per cent. Analysts note that while the Indian IT sector experienced a slow recovery in the first half of FY25, clear signs of acceleration are emerging.

Revenues for the first quarter of fiscal 2025 were $17.69 billion, compared with $16.22 billion in the first quarter of FY24, an increase of 9 per cent in US d Dollars and 8 per cent CC. Revenues were approximately $240 million above the top end of the company’s guided range of $16.85 billion to $17.45 billion.

The company upgraded its revenue growth guidance to 4-7 per cent CC, from its previously guided range of 3-6 per cent CC for FY25.

MOFSL report

“We believe the guidance upgrade, broad-based growth across verticals, and the overall commentary augur well for the sector. Accenture’s Q1FY25 results corroborate our view that the technology spending outlook continues to improve. Furthermore, improvements appear to be expanding beyond US BFSI, which continues to strengthen, into additional industry verticals,” a Motilal Oswal Financial Services (MOFSL) report said.

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While short-cycle deals remain inaccessible for larger providers, Accenture remains cautious in denoting a rebound in underlying client spending. The results, however, lend confidence to an improving technology spending backdrop for Indian IT in CY25.

Health care, public services

In Q1, growth was led by healthcare and public services at 12 per cent CC and products at 10 per cent CC revenue share. Healthcare shows growth potential since it is in the early stages of digitisation, offering growth opportunities in the coming years. Accenture in October, also acquired a Germany-based healthcare management consultancy firm consus.health.

MOFSL predicts healthcare will emerge as a strong vertical over the medium to long term due to neutral tailwinds from rate cuts, a low threat of insourcing, and stable client spending.

IT’s demand recovery

On the other hand, GenAI continues to gain traction among clients. “We delivered broad-based revenue growth across both consulting and managed services, and across each market and industry group, gaining market share. First quarter new bookings were $18.7 billion, including 30 quarterly client bookings of more than $100 million, and we continued to lead in helping our clients realise value with generative AI, with new bookings of $1.2 billion,” said Julie Sweet, the chair and CEO of Accenture.

An HDFC Securities report said the IT sector will witness a gradual demand recovery, led by the BFSI segment as the deal to revenue conversion improves. Deal bookings remain healthy as the outlook of clients stays positive with a focus on AI, digital, and cloud migration. High single-digit revenue growth will lead to mid-teen earnings growth in FY26E, but valuations remain rich limiting the upside, it said.

“So far, some verticals have also done well, like energy & utilities, for example, and retail, but typically it would be BFSI and healthcare. Generally, BFSI and telecom verticals were down in the last two years, but now, BFSI is turning around. Healthcare has also been doing fantastically for everyone,” echoed Pareekh Jain, CEO at Pareekh Consulting and EIIRTrend.