Accenture feels public sector spending pinch

Accenture is feeling the pinch from public sector cutbacks, but is still benefiting from an otherwise healthy marketplace.

The firm has reported strong financial results for the first quarter of fiscal 2011 with net revenues of $6.05 billion and operating income of $827 million. New bookings for the quarter were $6.31 billion, with consulting bookings of $3.72 billion and outsourcing bookings of $2.59 billion.

But health & public service revenues were down 1% in local currency. This was attributed to "uncertainty and challenges in the public sector continue, particularly in Europe" by Accenture CFO Pamela Craig who added that operating income in health & public service was "negatively impacted by continued lower contract profitability in parts of the Public Service portfolio and higher selling costs".

Outgoing Accenture CEO Bill Green noted: "Public service continues to be a rocky ride. The UK and the US are big components of our public service business and, those who have managed to read in the paper, particularly challenged, But frankly there is still lot of money being spent on a lot of services that need to be deployed, and we are just trying to make sure we are lining up with the right opportunities that are going to continue to go forward."

Green said there is still good work being done in the public sector, particularly in the healthcare market. "We are doing some really profound stuff," he argued. "If you look at the Health business broadly, it's all the things we do for the payers and the people that have to deal with the health administration. We are doing some of the most defining things around medical records that anybody is doing anywhere in the world, and in fact, we will be working on the first project where an entire country's medical records are totally digitized.

"Also important to that is initiatives around the world in new markets, where they have a clean sheet of paper to build the healthcare service industry, if you will. We are on the front end of that. So we feel particularly good about what's happening in health."