It may not be robust growth yet, but the economic recovery appears to be taking hold—at least among the large, public IT consulting firms.
In the three months that ended in March, IBM's Global Business Services ' practice grew 6.8 percent, compared to the same three months of 2010. GBS' gross profit margin also improved modestly, up from 27.2 percent to 27.4 percent in 1Q00 vs. 1Q11.
Big Blue is seeing significant growth from cloud opportunities; revenue is up five times the same quarter in 2010 revenue. Mark Loughridge, IBM's Senior vice president and chief financial officer, Finance and Enter-prise Transformation, said the services pipeline looks healthy. "Our total backlog ended the quarter at $142 billion," says Loughridge. "That's up $8 billion year to year, or one and a half billion dollars at constant currency."
Accenture is also seeing an uptick. CFO Pamela Craig told analysts in April that in the last year "we've seen a strong return in demand for our services." Craig added: "the slope of our recovery has been very strong these last four quarters—even stronger than we had anticipated.
"In local currency, we grew 18 percent over Q2 last year and 16 percent in the first half of this year." Helping to drive revenue is stability in consulting rates. Sander van't Noordende, Group CEO, Management Consulting, told analysts that prices are "stable to up." He adds, "getting the prices up is extremely high on our agenda, but … at the same time, it's also hard work. It's one client, one project at a time."
Capgemini Group reports published consolidated revenues for Q1 of $3.3 billion, up 14.5 percent year on year. On a like-for-like basis, growth is 6.4 percent. North America grew 10 percent, while Technology Services (9.5 percent), Local Professional Services (6.7 percent) and Consulting Services (1.2 percent) all showed improvement.
Middle market firms are also seeing improvements. For example, CIBER ended its fiscal year with about a 3 percent increase in consulting revenue, but saw more significant improvement in the fourth quarter. Revenue grew by about 5.6 percent in the last three months of the year vs. the same three months of the previous year.
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