Accenture Rises on Integration Plans

The company will link consultant, technical staffs.
Publish date:

Investors reacted warmly to news that


(ACN) - Get Report

would bolster its resources for linking its consultant and technical staffs.

Accenture said Monday that it will spend $250 million over the next three years to create a stronger, tighter link between its management consultants and the technical staff that designs and builds corporate information technology networks. The funds will support new training programs, marketing and the cost of developing techniques and tool-like applications that automate software upgrades.

Shares of Accenture closed Monday up $1.50, or 3.8%, to $41.50.

Accenture is responding to a growing trend among corporate IT managers who want to take a more methodical approach to understanding their business' technical needs before investing in new hardware, applications and maintenance. Accenture's plans include designing and building communications networks that carry data for email and other applications as well as voice calls.

The company's new services will also help clients manage existing IT assets. This includes handling software license renewals, consolidating servers in data centers and providing access for employees working from remote locations.

The move indicates that Accenture needs to bulk up on its technical services to compete with rivals like


(IBM) - Get Report

as well as the India-based firms


(INFY) - Get Report



(WIT) - Get Report

that are

adding consulting and planning services to their technical expertise.

"This is an important strategic move for Accenture," says Ken Kuhrt, an analyst with Ariel Capital Management. "It will make Accenture's services and revenue a little stickier" by tightly wrapping its consulting practice with its technical services.

Ariel holds about 7.5 million Accenture shares in various funds, according to filings with the

Securities and Exchange Commission


Monday's announcement can be viewed as a sign of continuing demand for consulting services as companies struggle to make the right technology investments for their business, says Moshe Katri, an analyst with Cowen.

Katri does not own shares in Accenture and Cowen does not perform investment banking services for the company.

"It's a signal that Accenture is maintaining the right headcount and skill sets to meet demand, which remains pretty healthy," he said. "There's a strong need for consultants that can help companies identify and plan accordingly for emerging technologies that can help their business."

The overall amount of Accenture's investment is modest given the amount it typically spends on training and research and development, said Katri.

Accenture will announce its third-quarter financial results on June 28.