Accenture, a provider of IT services, predicted first-quarter revenue below estimates due to IT investment reductions, increased inflation, and a stronger dollar.
With the US dollar at a two-decade high versus a basket of currencies and up around 16 percent thus far this year amid sharp [US] Fed rate rises and escalating geopolitical tensions, foreign exchange headwinds have gotten worse since Accenture’s third-quarter results.
This has had an effect on businesses with sizable international operations, such as Microsoft, Salesforce, and IBM.
Accenture recorded new bookings of US$18.40 billion (A$27.8 billion) for the fourth quarter. Accenture has diversified products across areas like cloud and security.
But due to a higher currency, which normally reduces revenues for IT companies that translate foreign currencies into dollars, the company anticipates a near 6% impact to its performance in fiscal 2023 compared to a year earlier.
One bright spot, according to analysts, is that most digital transformation initiatives are still non-discretionary, protecting firms like Accenture from a more severe impact from any company spending cuts.