Accenture Is the Hidden Leader of the Digital Transformation
Accenture

Accenture Is the Hidden Leader of the Digital Transformation

Investing well means seeing opportunities amid chaos. It’s also vital to find businesses that directly benefit by providing solutions.

On Tuesday, The New York Times revealed that Accenture (NYSE: ACN) — the giant consulting company — employs 5,800 content moderators for Facebook (Nasdaq: FB). The contract is worth $500 million annually.

Investors should consider buying Accenture and Facebook.

Facebook undoubtedly has a platform content moderation problem. During the runup to the 2016 presidential election, the Menlo Park, California-based company was widely criticized for allowing political disinformation campaigns to spread on its network. Later, The New York Times exposed a Russian operation using fake Facebook member accounts to spread divisive messaging.

Facebook’s also been at the center of several similar disinformation campaigns about COVID-19, vaccinations and a plethora of so-called cures. Critics have pushed for better corporate governance. Legislators are seeking federal regulation … it’s a mess.

According to The New York Times, Accenture has taken on all of these issues and more. The Ireland-based consulting firm now employs Facebook moderators in the Philippines, India, Portugal, Malaysia, Poland, Ireland, California and Texas.

•  This year, Accenture’s billed Facebook for a total of 5,805 moderators at $50 per hour or more. The annual contract is worth $500 million.

Related Post: How to Spot A digital Transformation Winner

Big Contracts Are Common at Accenture

As the quintessential management consulting firm, Accenture has business relationships at 91 of the Fortune 100 companies, and 75% of Fortune Global 500 businesses. The firm employs 537,000 people worldwide, many embedded with enterprise and government clients in over 120 countries.

Scale is important.

Many of the problems Accenture is being asked to solve in new settings have been resolved elsewhere. The solution is part of its vast knowledgebase. More clients lead to an even bigger vault of solutions. It’s a virtuous cycle.

I began recommending Accenture in 2014. The firm was the logical winner as enterprises began building out digital transformation projects. At that point in time, moving digital workflows to the cloud was in its early days.

Last December, CEO Julie Sweet said Accenture had 90,000 cloud professionals on staff. The company is the leading global partner of Amazon Web Services (AWS), Microsoft Azure and Google Cloud. The business is No. 1 in North America and Europe. It’s No. 3 in emerging markets, and recently reached 17,000 consultants in China.

Second-quarter sales jumped to $12.1 billion, up 8%. That was about $140 million above the previous guidance for the quarter, according to a corporate press release. Sweet says companies are stepping up plans to digitize their business infrastructure even as all signs point to a return to a more normal economy.

New bookings for Q2 rose to a record $16 billion, up 13% from a year ago.

•  It’s a story that rarely gets told. Investors are still missing the bigger picture: Enterprises are spending a fortune on digital consulting. Executives understand it’s the future of all commerce: Adapt or die.

The executives at Facebook get it. They know they have a content moderation problem that grew out of its massive digital footprint. Calling in Accenture allows the social media company to scale up or down in regions depending on need, or where it has no language expertise. Having an ‘at arm’s length’ relationship with content moderation is an added benefit in this era of unusually high scrutiny.

Related Post: Profit During Pandemonium

I have been an unapologetic Facebook bull for years. The business is a cash cow because advertisers want to reach its members.

And despite efforts by influencers and politicos to dissuade use, membership is growing. There are 3.1 billion monthly active users across its Facebook, WhatsApp and Instagram properties.

Accenture is a great business, too. Sales and profitability are on the rise as enterprises seek digital expertise. Just look at their daily chart:


 

Both Facebook and Accenture have performed well in 2021, rising 38.8% and 28.9%, respectively.

I recommended ACN to my Power Elite subscribers back in 2019, and they’re currently sitting on a 73% gain. There’s definitely still time to get in, and I highly recommend you click here now.

Longer-term investors should consider buying each stock into near-term weakness.

Best wishes,

Jon D. Markman

Leave a Reply

Your email address will not be published. Required fields are marked *