Who needs Accenture in the age of AI?

Who are you talking to? Clearly a consultant. Bad executives can denounce bad outside advice for failure and praise successful lawyers. Also for the industry's listed giants, their shareholders.

Between the beginning of 2015 and the end of 2024, Accenture, split from its accounting siblings in 2000 and published a year later, produced a total return of around 370% (including dividends) and was kind not only to the S&P 500 index, but also to the rivals of Goldman Sachs and Morgan Stanley and Rival Redubts' Redubts of Adcunty Smugness. The company was worth US$250 billion more than either investment bank as the US stock market rose to an all-time high in February.

However, since then, investors have wiped out about US$60 billion from its market value. On June 20th, the stock fell 7% after a disappointing quarterly profit report.

Both revenue and operating income rose faster than expected year-on-year to US$17.7 billion and US$3 billion, respectively. The US-government contracts have been hit less than feared by the efficiency of the Doge (Government's Bureau of Efficiency).

New bookings will decrease

However, new bookings fell in the second quarter of The Trot. Both a one-time consulting project and a “managed service” in which Accenture performs certain corporate functions on behalf of its clients every day. The number of individual customers responsible for the business worth US$100 million over the past three months has been immersed in 32 to 30.

Some of this is a temporary retreat. Amidst the fog of Trade World War I and the geopolitical struggles in the Middle East, many global companies are now obsessed with survival rather than “reinvention,” which is Accenture's stock.

Still, the company's problems work even deeper. From the internet to cloud computing, I now face the self-similar plight of the age of generative artificial intelligence (AI) by telling others how to adapt to NewFangled Tech. Who will a semi-autonomous Gen-AI “agents” clean the world and need a consultant?

This is an unpleasant question before Accenture boss Julie Sweet since 2019. Her two-part answer was to insist that clients needed as much help as previous innovations. Neither argument is persuasive.

It is true that many multinationals have no head or tail of AI generals. Ask most managers about the relative virtues of Claude Sonnet 4 and ChatGpt O3 and get a blank stare. A recent survey by data compiler S&P Global found that 42% of companies have abandoned most of their AI initiatives. A year ago, the figure was only 17%. Obviously, I have some handhelds in place.

But how long? Accenture's success was built on partnerships with many technology providers. In many cases of technology providers, sensitive products have been helpful for a long time to be chosen, installed and maintained by clients. All aspects emphasize the strength of their lasting relationship.

New Program

For example, in November, Accenture and Microsoft added “Copilot Business Transformation Practice” to Avenade, a 25-year-old joint venture. In May, consultants and SAP, the enterprise software giant and longtime collaborator, announced a new program to help small but rapidly growing companies “reinvent, prosper, grow” (in the words of Sweet) (in the words of Sweet) move faster, operate more efficiently, and work with confidence (Christian Klein, by the opposite figures of SAP).

But for all such public bonhomies, some of Accenture's partners cannot wait to cut out the middleman. AI is integrated into the offering, so it works straight out of the box. Additionally, AI agents continue to automatically update and upgrade IT systems according to user commands.

Newcomers like Palantir are embedding their engineers into their customers. This will save clients money to Accenture consultants, perhaps with the dull words of a friendly tech boss.

Already, Accenture's new Gen-AI contract pace has slowed from US$200 million in the previous year's quarter in the last three months to US$100 million. For Accenture, “AI is not digital 2.0” means summarizing Kennedy Intelligence's Tom Rodenhauser, which tracks the consulting industry.

Despite the Sweet's claims to the contrary, the AI ​​era appears to belong to its founder rather than the technology enabler like Accenture.

Let's consider the past 10 years. Seven and a half years before ChatGpt introduced it to the masses in November 2022, Accenture shareholder returns measured at 200% for the period, and the forward-looking statements measured at the ratio of forecast revenues for its stock prices warped those of companies such as SAP and IBM. The table changed in two and a half years. Palantir, part of which is worth US$338 billion, six times the amount of its year ago.

Accenture could have used access to capital markets to invest in Deep Tech (for example, IBM continues to pivot consulting in the 1990s). Instead, it chose to splurge countless “tuck-in” acquisitions of small consultants. This includes 50 ads and marketing institutions that Gen AI might be trying to make things outdated if Meta and Google have their own way.

To calm the investor's nerves, Sweet reorganized her company around “reinventive services.” The new unit combines all Accenture's business with a one-stop shop to meet the needs of its clients.

Manish Sharma, the boss who was surprised by Accenture's American Operations, will be run. This sounds like so many things like Accenture and Sharma's new roles. If your company really wants to avoid AI stopping it from existing, you may need better advice.

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