“Adverse Macro Now Hitting Tech Spend” – PL Capital Flags Booking Stress Post Accenture Q3

Mumbai | June 24 – Global consulting and technology leader Accenture reported a better-than-expected revenue performance in Q3FY25. However, the sharp fall in deal bookings and cautious guidance for the coming quarter have signalled fresh headwinds for the broader IT services industry. According to a new note from PL Capital, the impact of a weakening macro environment is now clearly visible in client technology spending behaviour.

“The outsourcing deal booking declined for a third consecutive quarter, with the decline in Q3 sharper at 10% YoY. Both of these factors would concern Indian IT services companies, as it indicates that the adverse macro environment has started impacting clients’ tech spending decisions,” observed Pritesh Thakkar and Sujay Chavan, analysts at PL Capital.

Accenture Q3: Strong execution, but disappointed on booking

Accenture’s Q3FY25 numbers reinforced this dual narrative. The company beat revenue expectations, clocking $17.7 billion (+7.7% YoY), but total bookings fell 6% YoY, with outsourcing bookings plunging by 10% YoY—the third straight quarter of decline.

Management Commentary:

Accenture’s management acknowledged that clients have become more cautious compared to last year. Enterprises are now prioritising essential tech projects while deferring larger discretionary spends. The company also noted that federal mandates in the U.S. have slowed public sector IT budgets, adding to the pressure on deal activity.

While Accenture remains confident in long-term demand, especially for AI-led services, it admitted that deal closures are taking longer and that clients are asking for tighter ROI and more focused vendor engagements.

The company described the Q3 results as “strong on execution,” but said that guidance reflects increased scrutiny of budgets and slower decision-making cycles across verticals.

This aligns with PL Capital’s view that the macro overhang is no longer theoretical—it is now reshaping how and where clients spend their tech dollars.

Vertical Trends: BFSI Strong, Talent Rationalisation Begins

Not all business segments faced pressure. Accenture’s Financial Services vertical grew 13% YoY in constant currency, delivering a second consecutive quarter of double-digit growth. This continued strength in BFSI is a positive signal for Indian IT firms with strong exposure to banking and insurance clients.

Other verticals also held up well: Healthcare and Products grew 7% each, while CMT expanded 5% and Resources rose 4%. However, hiring patterns showed a visible shift—Accenture’s net headcount dropped by 10,400, its largest quarterly cut in recent periods. PL Capital notes that this reflects internal optimisation as companies prepare for an uncertain demand cycle.

What This Means for Indian IT

PL Capital believes that Accenture’s results provide an important read-through for Indian IT firms. While execution remains solid across the board, the real risk now lies in deal conversion and pipeline quality. “We expect the slowdown in outsourcing bookings might further intensify conversion challenges on selective pockets, particularly tariff-induced verticals,” PL Capital stated.

However, the firm also pointed out that BFSI should continue its momentum, and GenAI adoption is likely to accelerate across Indian vendors. Firms that can adapt quickly and showcase value in newer AI and cloud offerings may still see steady demand.

Sector View: 

India’s IT sector entered FY26 with stable fundamentals—buoyed by ongoing cloud migrations, digital transformation deals, and renewed interest in AI-led initiatives. But the softness in new bookings, as seen in Accenture’s report, has raised questions about near-term demand visibility.

PL Capital’s research suggests that deal decision timelines are getting stretched, vendor consolidation is picking up, and pricing conversations are becoming tighter across verticals like manufacturing, telecom, and resources. In contrast, BFSI and healthcare are expected to remain resilient.

“The environment is not conducive for healthy deal wins across the board,” the PL analysts said. “Players with strong positioning in BFSI and the Americas may hold up better, while others could face delayed revenue recognition.”

PL Capital’s IT Stock Picks: 

In light of the shifting demand environment, PL Capital recommends a selective investment approach in the Indian IT space. The firm continues to back companies that combine scale, BFSI strength, and next-gen capabilities in GenAI, cloud, and automation.

PL Capital Recommendations (as of June 23, 2025)

“We continue to prefer companies with strong BFSI exposure and clear strategic direction in AI and cloud transformation,” PL Capital concluded.

Outlook: 

As Indian IT majors prepare to report Q1FY26 numbers, the focus will be on deal pipeline visibility, GenAI monetisation, pricing trends, and client budget outlooks. Vertical-specific commentary—especially in BFSI and healthcare—will offer important clues about demand health in the second half of FY26.

Read the full Report Here