A tale of two consultancy firms – Accenture and Tribal announce results

Two very different firms, two very different sets of financial results.

Accenture recently announced fourth quarter and full year results at the high end of market expectations.

Net revenues for the fourth quarter of fiscal 2010 were $5.42 billion, compared with $5.15 billion for the fourth quarter of fiscal 2009, an increase of 5 percent in U.S. dollars and 8 percent in local currency.

Operating income for the fourth quarter was $714 million, up from $672m the previous year,  or 13.2% of revenues.  That's a nice healthy profit margin for anyone negotiating with Accenture (including Governments)  to get stuck into.  Remind them of that when they give you the hard luck story about the rate increase they so badly need.   Interestingly, their Health & Public Service operating group was the only area to show a downturn; but they have so many other business areas that their spread of work and geography means they can overcome reductions in Government spending, locally or globally.

Now contract that with Tribal , the UK based consulting and recruitment firm. Half year group revenue was down 5% and adjusted profit before tax declined from £7.7m to £4.6 million.  Tribal are a good firm, but have been heavily dependent on UK public sector consulting, interim staff and recruitment markets.  Those are of course three of the spend areas that have taken a rapid hit since the spending brakes were applied in May.  Times are tough for firms like this.

So procurement executives need to keep a supplier risk eye out for key providers who are heavily dependent on the UK - or probably any 'Western' - government for a large part of their business.  And, not that Tribal are a small firm by any means,  I do worry that the expenditure cuts are actually going to hurt small to mid size 'local' suppliers more than they will hit the global mega firms, who will be protected by both their diverse customer base and the way they lock public sector clients into long-term, hard to escape deals.


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