Published on the 17/01/2023 | Written by Heather Wright
First full year post-Zag acquisition pays dividends…
Accenture’s New Zealand revenues have soared past the $200 million – increasing around 67 percent on the back of its first full year with Kiwi SAP and cloud consultancy Zag in the fold.
The professional services company’s financials for the year to 31 August 2021 show revenue was up from $120.8 million to $202.1 million. Profit before tax also made a jump, from $2.9 million to $7.0 million, though after-tax profit was only up marginally, from $2.3 million to $2.9 million.
“2022 has been another one for the books.”
The increasing fortunes follow Accenture’s $40 million 2020 purchase of SAP consultancy Zag in October 2020. For the year prior to the purchase, Accenture NZ had recorded a decline in revenue to $66.1 million.
The acquisition of Zag added in-demand SAP specialists to Accenture’s team, with demand high for those with S/4 HANA stills. All up, around 200 FTEs were added to Accenture’s headcount through the deal.
In a LinkedIn post, Nick Mulcahy Accenture New Zealand country managing director and former Zag CEO, applauded his team for putting in ‘the hard mahi, creating waves and using your expertise to create impact’.
“2022 has been another one for the books,” Mulcahy says.
“The last 12 months have seen us continue on this upward growth trajectory, tackling an array of interesting and innovative projects, from technology, strategy and consulting to Song/Monkeys, working with partners to deliver top tier solutions and expanding our network of people across New Zealand.”
Song is the rebranded Accenture Interactive, while The Monkeys is the separate advertising business, launched last year.
Nearly 80 percent of Accenture New Zealand’s revenue comes from its local consulting business, which contributed $160.7 million, up from $102.7 million.
Globally, the company is expecting a softening of its consulting business in the coming months as the pandemic-inspired IT transformation boom is replaced by recessionary fears. In its recent Q1 2023 earnings the company reported a five percent revenue increase, quarter on quarter, to US$15.7 billion, but flagged stagnant consulting revenues, which were up just one percent in US dollars, saying it could miss market estimates as pullback in client spending, particularly in retail began to bite.
Accenture chief executive Julie Sweet told a post-earnings conference call that the strategy and consulting business is expected to decline ‘slightly’ in the second quarter.
“[Customers] are more and more focused on cost and resilience. And many are having to make pretty hard choices.”
Despite that, Sweet was optimistic that IT spending will continue to outweigh the economic slowdown.
“We believe that the current macro is making it even clearer to clients that they need to change more, not less, and that two of the five key forces of change that we have identified for the next decade – the need for total enterprise reinvention enabled by tech, data and AI and the ability to access, create and unlock the potential of talent – are critical to succeed in the near, medium and long term.
In New Zealand, outsourcing also saw robust growth, albeit off a much smaller base, up from $10.3 million to $25.4 million. Resale revenues cracked $5 million, up from $1.6 million in 2021.
The company launched a dedicated Microsoft practice last year, with Mulcahy telling iStart at the time that he expected the unit to be providing ‘not far off’ 10 percent of revenue for the company in its first year.
“We see Microsoft as extremely significant,” he said in September.
“It is very rare you can walk into an enterprise customer and find zero Microsoft.”
In Australia, the ATO Corporate Tax Transparency report for 2020-21 – the latest available – shows revenue of $2.3 billion for the Australian Accenture operations, though only $111.5 million is listed as taxable income. The 2019-20 report showed revenue of nearly $2.2 billion.
