Accenture plc. (ACN) has secured a big job order from the Tokyo Metropolitan Government (“TMG”). As per the new task order, Accenture has been entrusted by TMG with the responsibility of recruiting 10 or more foreign companies to establish their Asian regional headquarters or research and development (R&D) centers in Tokyo’s Special Zone by the end of Mar 2014.
By using its management consulting skills and capabilities, Accenture would be drawing up a list of foreign companies fit to set up their bases in Tokyo’s regional business district, which would in turn make Tokyo an ideal destination for business expansion.
Accenture will persuade and help companies to set up their bases in this region. Apart from this, Accenture will assist TMG in improving the business, governance and living environment so as to further improve the attractiveness of the business district.
This is a new area of activity for the technology company. Previously, Accenture was not directly involved in developing a business district for any government. This exposure will improve Accenture’s experience and if successful, will enable it to contract such business in the future as well.
The emerging markets are the key growth area for Accenture’s global delivery capabilities, which includes countries such as India, Philippines, China, LATAM, among others. The company is also intensifying its focus on working with local clients. Geographic diversification of revenues is a key step in decreasing risk from slower performance of some developed economies.
The firm has been on a winning streak, as far as clients in emerging high-growth markets are concerned. The company continues to make investments to enhance growth as far as emerging markets are concerned. Moreover, Accenture is strengthening its foothold in other under-penetrated economies, such as the Middle East.
Accenture has been able to maintain a steady pace of deal wins over the last few years. This will provide the much-needed support to the company’s revenue base. The consulting and outsourcing business has made a meaningful contribution to the company’s revenues over the years.
On the other hand, sensing the opportunity in the Asian and other such emerging markets, Cognizant Technology Solutions Corp (CTSH) and IBM Corp. (IBM) are also winning business deals and offering services at competitive rates. The stiff competition in Asia and persistent weakness in Europe are telling on Accenture’s results.
Accenture currently has a Zacks Rank #3 (Hold). Another technology company, Information Services Group Inc. (III), carries a Zacks Rank #1 (Strong Buy), and is therefore worth considering.
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