ACN
#We have, of course, a range, <UNK>, is 3 points to cover scenarios like that on the downside.
So we've accounted for it to the extent we have a 3 point range.
And I ---+ we don't have any evidence of any notable change in client budgets to the worse, which is your question.
We don't have any evidence of that through our channels.
And again, our pipeline looks very good which is indicative of the level of client discussions that are underway currently.
Thank you, <UNK>.
Your question was about Financial Services, the Financial Services Operating Group; correct.
Okay.
So commenting on the FS, we continue to be pleased with the results.
You see, again, double-digit growth in Financial Services.
This is an industry if you look all together, which is one of the largest.
I think we mentioned at the IA Day that if you put together capital market and banking would be one of the largest, if not the largest industry at Accenture.
And of course, this is an industry historically and currently investing in technology and in transformation.
So we continue to be very pleased with the opportunities offered by Financial Services.
They have to transform and of course, Digital-related services are extremely relevant in Financial Services, almost by definition.
It's a B to C and it's enabling a lot of digital native technologies to maximize connectivity with clients as well as digitalizing their operations.
This is an industry where historically, we made the right investments.
I think about the investments we made in insurance where we are extremely well-positioned with our software solutions and thinking about the investments we made in credit services where we are now building a leading independent mortgage processor in the US and very pleased with the momentum we're getting in Brazil, where we are expanding our services and credit services to, again, take a position.
We just announced this quarter a very niche, a very good acquisition in Boston on asset management called Beacon.
I'm very pleased with that, adding super deep expertise.
So overall, we are very pleased with what we're doing in FS which is quite broad-based across the different region as well.
If you look at North America, if you look at, especially Europe, where we're doing very well, excellent result in growth markets.
So this is the industry where I'm coming from.
This is the one I love the most.
Yes, the ---+ in the context of the overall Accenture organization, the acquired headcount is just not that ---+ it's an important skills that we're acquiring but in the context of the overall headcount to your question, it's just not that material.
We see growth in headcount, really across our business, including, by the way, in our GDN.
You'll see in the statistics that a high percentage of the headcount is in our Global Delivery Network and again, I think the theme that underpins it, whether you're talking about Strategy, Consulting, Application Services or Operations, the common theme is this digital rotation and the services and the type of work we're doing in that regard, really, as a driver of the skills we're acquiring as a general thing.
Well, I would say as a general rule, if you look at Accenture Strategy, Accenture Consulting, and the project-based work in Application Services, which is this deployment of new tech and let's just say, packaged software, even more broadly.
The return to revenue is in all of those cases is faster than, let's say, the rest of our business that I didn't call out.
And that's just ---+ those are just structural differences.
So when you see such strong growth rates in our consulting type of work business, that just reflects bookings that convert to revenue faster than, let's say, certainly the typical operations contract would or an Application Maintenance contract would.
That is correct.
So Application Services has what we have traditionally called Application Outsourcing, which is ---+ or Application Maintenance work.
That maps to our outsourcing type of work.
The rest of Application Services, which is really about fundamentally development work, application development work, whether it be new tech or could be development around existing legacy applications, packaged software deployment, et cetera, that is what we would have historically referred to as systems integration and that maps to the consulting type of work.
We're not going to comment specific ---+ I mean, not in specific terms on margin for each dimension.
I think we've said before that the nature of digital, just as a general statement, it tends to be in high demand.
We have unique and differentiated skills and capabilities and arguably, positioning in the marketplace and all of those things lend themselves to better economics.
It's our job to deliver on that but it certainly creates the right environment for better economics.
Your last question was ---+ the other part of the question was, so digital economics ---+
There is to the extent that a high percentage of our digital bookings are consulting and consulting has a higher velocity.
Specifically, I think you're referring to the Application Maintenance, Application Outsourcing piece of Application Services.
What I would say is that there's no doubt that, that continues to be a highly competitive market.
When we comment on pricing, we comment on pricing in terms of the profit percentage on work that we sell and in that part of our business, we see stable pricing.
Thank you.
Hi, <UNK>.
Absolutely.
Happy to comment on this, because I truly believe that we are proposing to the marketplace and organizing Accenture in a very unique and differentiated way.
And I tend to believe that none of our competitors yet could match the capabilities and the organization we're putting in place.
First, indeed, we have created five Accenture Strategy, Accenture Consulting, Accenture Digital, Accenture Technology and Accenture Operations, all at scale, all with highly differentiated skills, very different positioning compared to the competitive environment, different economics.
And to your question, indeed, they are run as a business with the objective of being top class in their own category.
But of course, where we differentiate in the marketplace is our unique ability to combine our services to deliver what we are calling the end-to-end services, because we truly believe more and more clients are buying an outcome more than an effort.
If you want to deliver an outcome, you need to contribute and participate to the design and planning, typically done by Accenture Strategy and Accenture Consulting, the high-value services and consultancy, if you will.
Then you're moving to building solutions with absolutely leading and cutting-edge solutions, exactly the job of Accenture Digital for digital native solutions and Accenture Technology for the leading platform solution or application packages.
And when you have been building solutions, you're moving to Accenture Operations, the part of Accenture where we could operate on behalf of the clients, either the business process, the cloud operation or their security operation.
The depth and breadth and kind of operating model is absolutely unique in the marketplace and is a great source of differentiation for Accenture.
And on top of that, indeed, <UNK>, we're putting our rotation to the new.
Each of the five have a clear mandate to rotate their business to a new type of services for Accenture Strategy is going to be being cutting edge in developing digital technologies and creating new business model for clients.
Accenture Technology will now imbed very innovative ways of doing development which we're calling, liquid, intelligent and connected.
Accenture Operation will be extraordinary analytics rich in the way we are developing operations.
And in security with the acquisition of FusionX, we are absolutely at top of the game in terms of simulating cyber attack.
So all this architecture we're putting in place and I said that with a lot of passion and energy during that call, is indeed unique in the marketplace, <UNK>.
<UNK>, let me just add to what <UNK> said and address another part of your question.
A key component of what <UNK> just said is that our talent strategy is aligned with our five businesses.
And so we have talent that is managed, nurtured, developed, specific to Accenture Strategy.
Those people tend to work essentially, exclusively on Accenture Strategy work.
We have people that are identified as Accenture Consulting, developed, nurtured, et cetera.
Those people tend to work, for the most part, exclusively on consulting work.
By the way, that includes our account leads, people who are predominantly deployed to our operating groups that, really, not only deliver consulting services, but are also the integrator of Accenture capabilities to serve the client's need.
You have operations where, again, we have a talent model for operations.
Mike Salvino and Debbie Polishook manage that workforce.
They, for the most part, work exclusively in operations and then you have Accenture Technology.
Accenture Technology is a little bit different in that they have a unique talent model but yet some of those technology people support the development-type work, the new tech.
Some of those people may actually even be part of consulting project delivery.
We also are have some of those people that, at points in time, may be part of our operations project delivery.
They work a little bit more across the organization, but beyond technology, we also have the innovation labs and things like that.
But excluding Technology, the other businesses are very specific and fit for purpose in terms of the talent model and the types of projects those people work on for our clients.
I can't characterize.
I can characterize only the trend is clear that you see, a shift from investment in the legacy, if you will, to investment of the new.
I tend to believe that this shift is increasing and as reflected in our growth in Digital-related services.
Now I don't have any market data that would characterize the percentage of the shift.
It's there.
It's getting bigger and indeed, we could take advantage of this shift in terms of budget, as reflected with our 20%-plus growth in Digital-related services.
On balance, yes.
Thank you, <UNK>.
Yes.
So first of all, we still have room to expand our GDN headcount in our model and certainly, we don't see that we've reached a destination and we wouldn't go any further.
Having said that, one of the things that highly differentiates Accenture is our deep industry expertise and our client account teams that are at the client site each and every day, working shoulder to shoulder with our clients.
And so the thing about our model is that we have a very strong presence in each of the geographic markets around the world where we operate.
That's a vital part of what is distinctive about Accenture.
And then we extend that and complement that with arguably the best technology Global Delivery Network in the world.
To your question, we have the opportunity to take that further and we'll see how the market evolves and then we'll respond accordingly.
Great.
I'll just say ---+ I can't really do justice to the questions.
I'll just share a couple of quick points.
First of all, the free cash flow guidance is still above 1 in terms of free cash flow to net income, so very healthy level of free cash flow.
I mean, a couple of things that influence it.
One is the DSOs; the other is timing of cash tax payments that not only impacts a particular quarter but can be different fiscal year to fiscal year and the third is CapEx, just to name those three because you called them out.
And we do anticipate a higher level of capital spending this year as compared to last year.
So that's in the mix as well.
Okay.
Certainly time now to wrap up and I want to thank you again for joining us today.
With our first quarter being up, clearly, we have created strong momentum in our business, especially with investment we made in Digital, Cloud and Security services which we are now calling at Accenture the new.
And that makes me really confident in our ability to continue to successfully grow our business and gain market share.
I want to take this opportunity to wish all of you, our investors and analysts and our Accenture people, who are hopefully listening to the call a very happy holiday season and all the best for the new year.
We look forward to talking with you again next quarter.
In the meantime, if you have any questions, please feel free to call <UNK>.
All the best to all of you and the best for the new year.
