Accenture signs up $100 mn Gen AI projects in 4 months

Notably, in its effort to alleviate concerns of investors, Accenture will leverage artificial intelligence (AI) just like it capitalized on the demand surge for cloud computing services. “Things like Gen AI are a big opportunity, but it is early (days). In the last four months, we did 100 projects, representing about $100 million in sales," Accenture chair and chief executive officer Julie Sweet told analysts in a post-earnings interaction on Thursday.

Gen AI encompasses a wide range of technologies that includes algorithms such as ChatGPT, and is capable of creating forms of content including text, audio, and video.

“GenAI is going to go faster than, say, cloud, which took more like a decade… We are investing $3 billion in the next three years (in AI) because we think this is another Cloud First moment where we were out early to invest at scale. I think, another good analogy actually, maybe even less so than the offshore, is more like SaaS (software as a service), right?...When SaaS came, what were the opportunities (being talked about)? There was a lot of worry about how SaaS will interrupt IT services. Obviously, it’s been just a huge opportunity. So I think Gen AI is obviously a big opportunity for us to help our clients," said Sweet.

Accenture’s disclosure and showcasing of its prowess in AI puts a spotlight on homegrown tech giants, including Tata Consultancy Services Ltd, Infosys Ltd and HCL Technologies Ltd, who have so far not shared their AI roadmap.

To be sure, AI-related work done by Accenture is still a small part of its overall business: Order bookings for Gen AI projects were about 0.6% of its $17.2 billion deal wins in March-May.

The rapid adoption of Gen AI among Fortune 500 firms is underscored by the contracts bagged by Accenture, and gains significance given that only seven months ago, in November, the launch of ChatGPT made AI the biggest talking point as a potential catalyst for disruptions in businesses.

Accenture’s bet on AI emerges from its confidence of replicating past successes of its cloud journey. Earlier this month, the firm announced that it will invest $3 billion over three years for its data and AI practice. “Bigger growth is not going to be in pure Gen AI, but in helping firms get their end-of-life data migrated to the cloud," Sweet said.

Sample this: In September 2020, Accenture said it will spend $3 billion to scale its cloud business. Revenue from cloud-related projects accounted for about $12 billion or 27% of its total revenue in the year ended August 2020. Two years later, cloud services business more than doubled to $26 billion to contribute 46% to its revenue of $61.6 billion in the year ended August 2022.

Still, a section of analysts are not convinced that AI will be able to help the tech services giant achieve the same level of success it has in cloud computing. “We believe AI bookings increase as the models mature and as companies figure out how to better manage their data, including with help from Accenture and others," Keith Bachman, an analyst with BMO Capital Markets, wrote in a note, Macro Surfaces, GenAI Remains, on 22 June. “Long term, we have questions on risk to pricing/billable hours as coding and maintenance become more commoditised due to gen AI, given that AI is different than cloud or other tech advancements in the way it will impact the supply side of the model."

Until now, Accenture remains the only technology services firm to share the business it gets from the cloud, Accenture Song (formerly Interactive) and Cyber Security.

Unsurprisingly, analysts have looked at Accenture as a guidepost in how technology services firms are embracing newer technologies.

According to a review of analyst interactions by Mint, eight of the 15 questions in Accenture’s third-quarter post-earnings interaction were on AI.