Public data shows that GenAI projects account for 2.4% of its total workload, indicating that accelerating revenue generation from artificial intelligence is becoming increasingly important for IT companies.

In a recent earnings conference call, global IT giant Accenture revealed that although its revenue only grew by 3% to reach $16.2 billion, it achieved new bookings of over $450 million solely from GenAI applications, including transactions with McDonald's and BBVA.

The revenue from GenAI increased by 50% compared to the previous quarter, demonstrating Accenture's early leadership position in the GenAI field compared to regional IT service providers. This bold statement with solid numbers has also given them more confidence in the market.

Accenture CEO Julie Sweet said, "Regarding GenAI, I just want to say that the sales for this quarter were $450 million, and we are very satisfied with this. It proves our leading position here."

On the other hand, industry experts predict that even with the increase in pilot projects and collaborations in this emerging field, the contribution of GenAI to the total revenue of top IT companies will be less than 1%. Apurva Prasad, Vice President of HDFC Securities Research, observed, "The overall scale of cross-industry AI deployment is quite strong. However, creative artificial intelligence as part of it is still relatively small."

In comparison, Indian IT companies such as Tata Consultancy Services (TCS), Infosys, Wipro, HCLTech, and LTIMindtree have not released any GenAI-specific data indicating their roadmap or growth metrics. Instead, these companies are more focused on establishing partnerships with giants like Microsoft, AWS, and Google. They have invested heavily in employee skill enhancement, such as Wipro's plan to invest $1 billion in artificial intelligence over three years and the launch of the Wipro AI360 ecosystem.

Integration of GenAI with Overall Strategy

Accenture incorporates GenAI into its broader digital transformation strategy to ensure alignment with their overall business goals. CEO Julie Sweet emphasized that GenAI is not plug-and-play but a complex technology that requires in-depth understanding to effectively scale.

"This is Accenture's leadership, right? We have strategy, consulting services, deep industry and functional expertise," Sweet added, highlighting Accenture's unique position in this evolving field.

Experts predict that GenAI bookings will exceed $4 billion in FY24, supported by solid $3 billion data and AI investments, and expect Accenture to capture a significant market share. The company gains confidence from its extensive experience in the cloud domain.

In terms of acquisitions and collaborations, Accenture's partnerships with major industry players enhance its ability to combine technology with business value. Sweet envisions 2024 as a turning point, transitioning clients from experimentation to scalable GenAI applications.

"Consider 2024 as the year of transition for our clients from experimentation to scale, and we believe we are best positioned to lead this transition to value," she said.

Accenture is actively integrating GenAI into client projects, such as developing a GenAI-supported financial advisor for BBVA and enhancing content production for a global hotel group. A key project with McDonald's focuses on integrating cloud technology and GenAI to significantly improve customer and employee experiences.

The company's expansion strategy in this field also marks significant acquisitions in different regions, totaling $788 million, enhancing its cloud capabilities and strengthening its AI expertise. In particular, the acquisition of Ammagamma added 90 AI experts to the Accenture team, helping them double the number of skilled and trained data and AI professionals to 80,000.

Previously, the company had invested in a total of 11 AI-related enterprises, including three from India: Flutura, Bridgei2i, and Byte Prophecy, with Flutura being the most recent investment.

A Good Sign for the Indian IT Industry

Indian IT companies are also shifting their focus to building a skilled workforce and increasing investment in GenAI, as clients have shown willingness to fund early-stage proof-of-concept projects. This has led to a new wave of collaboration between service providers and their clients to explore the potential of GenAI.

Indian IT giants have trained nearly 700,000 employees to deal with GenAI. According to Milind Lakkad, Executive Vice President and Global Head of Human Resources at TCS, TCS has over 100,000 ready-to-go GenAI employees. Infosys has trained 57,000 employees, while Wipro has trained 180,000. HCLTech and LTIMindtree are also focused on training their employees for GenAI.

Infosys has launched the Topaz project, focusing on GenAI technology, and CEO Salil Parekh stated that the company is involved in 80 GenAI projects. Meanwhile, Coforge has launched Quasar, a GenAI platform with over 100 cognitive and generative use cases. LTIMindtree has also introduced Canvas.ai to help clients expand their GenAI capabilities.

In addition, Accenture disclosed that its GenAI project bookings accounted for approximately 2.4% of its total workload for the fiscal year from September to August, compared to only 0.6% from March to May. This indicates an acceleration of momentum and industry revenue growth.

However, a research analyst from a Mumbai brokerage firm, who requested anonymity, stated that GenAI use cases may eventually lead to faster monetization but not immediately. They added, "At least in the second half of this fiscal year, no major creative AI deals will happen for any Indian IT outsourcers."

The economic downturn has also affected Indian IT stocks. Since the end of September, the stock prices of Tata Consultancy Services, Wipro, and Tech Mahindra have fallen by 2%, while Infosys' stock price remains unchanged. On the other hand, HCL Technologies has achieved growth due to winning large deals and robust engineering practices.

Amidst these challenges, Infosys and HCL Technologies have lowered their annual revenue growth forecasts. Infosys has revised its growth outlook for this fiscal year to 1-2.5%, while HCL has adjusted its guidance to 4-5% organic growth. Wipro has noted that the current quarter could see a maximum revenue contraction of 3.5%.

Analysts also predict that IT service spending will remain moderate at least in the short term, as companies typically decide their annual budgets after February. Accenture itself has pointed out that budget-related decision-making speed, especially in technology and media companies, has slowed down, leading them to set a target of -2% to 2% for the second quarter. Therefore, although GenAI holds promise, its current impact on revenue growth in the Indian IT industry seems limited against the backdrop of global economic uncertainty and conservative client spending. However, as the quarter approaches, the development of GenAI's profitability for the Indian IT industry will be a topic worth watching.