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Monday, April 4, 2011

Accenture Focuses on Mail Service

Global technology services and management consulting company Accenture Plc. (ACN - Snapshot Report) recently announced that it would enable postal agencies worldwide to offer digital mail. This mail is basically a digital version of printed mail which will be delivered to the mail account of their customers.

This will help the operators to recapture the lost revenue from a steady decline in mail volumes and will also help them to compete against a growing number of independent operators currently offering digital mail directly to consumers.

The consulting major has 20 postal clients across the globe, including some of the world’s largest postal departments, and helps them to digitalize some of the world’s major mail services. Accenture expects this business to grow at a higher rate, as the current volume of non-digital mail is quite low in the US and Europe.

This is the continuation of a series of contract wins that the company has witnessed in recent times. A few days back, Accenture won a five-year application outsourcing contract from Netherlands-based CEVA Logistics, a leading banking and financial services group. Accenture did not disclose the monetary value of the contract, which is expected to generate recurring revenue for the next several years.

Moreover, some industry experts also believe that Accenture generates less than 5% of revenue from Japan, most of which originates from the Tokyo region. So it is expected that the magnitude of loss from the recent earthquake will be minimal for Accenture. But it is too early to predict the extent of loss.

After the year-long recession witnessed last year, most of the tech companies are seeing a revival in business volumes and investor sentiment and Accenture is no exception. So 2011 is expected to be a good year for this sector, but it will definitely take some more time for performance to reach 2008 levels.

Based on the improving business momentum and increase in technology spending, Accenture raised its revenue and earnings guidance for fiscal 2011.

We are encouraged by the steady flow of new business, which is the result of increasing tech spending in 2011, although increasing competition from International Business Machine (IBM - Analyst Report) may temper growth prospects to some extent.

The company has a short-term Buy recommendation

The Dept of Posts has engaged the Accenture as the consultancy service for the modernization project and now it dictates terms.

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