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#Just working backwards, <UNK>, I'll give you a view on digital growth, as well as our dimensional growth.
I'm going to give that view at IA day, because we're still working through our view on that.
To your other question, I'll start with 2015.
Our inorganic contribution signaled last quarter was in the range of 1% to 1.5%.
Our actual inorganic came in roughly at the mid-point of that range.
The point being that when you look at our 11% growth for the year, the organic growth was obviously substantial.
As we look forward to 2016, we are very proud of the success that we've had in the market with our acquisition activity, in the last two quarters in particular.
We also have four acquisitions.
<UNK> mentioned Cloud Sherpas, which had been announced but not yet closed.
But if you take what we've closed and the four that have been announced, not yet closed, then we would estimate that our inorganic would be, let's say, approaching the range, in the range of about 2%.
Of course, that can change, depending on the timing of when these four deals, Cloud Sherpas in particular, ultimately gets closed.
But we would be in that range, so it would be a click up.
Thank you, <UNK>.
<UNK>, let me just mention two things, and then <UNK> will want to round this out, just in terms of the factual context.
Again, I want to point out that the year we just closed, our organic growth would have been about 9.5%, roughly.
And so, the organic part of our Business, that machine was hitting on all cylinders in 2015, and was a real testament to the power of our growth strategy.
And this evolution of Accenture to focusing on our five businesses that we've talked about, leveraging the very distinctive channel that we have through our operating groups and our largest geographic markets.
So, just that factual point, our inorganic growth machine is hitting on all cylinders.
You mentioned ERP.
I'll go ahead and put this out there, that the ERP business ---+ we've always said that ERP goes through cycles, but yet at the end of the day, it's an attractive business.
Our ERP business did stabilize in 2015.
It actually grew slightly.
Now, as a percentage of our total revenue, it's actually gotten ---+ it's come down a click in terms of what it represents of Accenture's business, because the non-ERP is growing significantly.
But nonetheless, the ERP story is not a bad story.
I'll just pass it over to <UNK>.
Just to reconfirm the element of our acquisition strategy, we are doing acquisitions for three reasons.
The first one is to accelerate access to capabilities in the new, and what we're calling the new at Accenture is now the combination of digital services, cloud services, security services, or new technologies, if you will, such as cognitive computing, automation, or artificial intelligence.
Second is to have access to very deep industry expertise, especially in consulting.
That is the rationale for acquisition of Axia, Javelin companies, consulting, deep, structure, Hytracc, either deep industry expertise in upstream energy, in retail.
That's the reason ---+ that's number two.
And the number three would be to scale faster, to take the leadership position in the marketplace, and by leadership, we mean the number one.
I'm thinking about Procurian.
I'm thinking about Cloud Sherpas.
I would put in that category, scale to lead, putting more distance between Accenture and the competition.
Three reasons why we are doing the acquisition.
And then we grow organic on top of these acquisition.
Probably one of the best case coming in my mind would be Procurian.
We made the acquisition of Procurian.
We became the number one in procurement services.
And since we made this acquisition, we've been scaling faster, and now we are the market leader, and the organic growth of our procurement services is even higher than the business case we set.
Yes.
First of all, I would encourage you and others to look at the absolute amount, because the absolute amount, as you referenced ---+ I'll use my word, but your thought, I hope, is that it's outstanding.
Our operating cash flow, our free cash flow exceeds net income, which I think is a standard for any company, which is indicative of outstanding cash flow.
And we're in the range, across our range, we're in the range of, let's say, a rounded 1.1 of free cash flow to net income.
The absolute number is very, very strong.
As we talked about before, there are many puts and takes in our cash flow in any particular year.
Changes in DSO is an example.
We have allowed for the possibility, not that this is our ---+ what we're trying to drive our teams to, but we've allowed for the possibility of a slight uptick in DSOs.
You also notice that we have allowed for further CapEx spending, which is part of the increase.
And then beyond that, there are differences in timings.
For example, tax cash payments can be very different on one year ---+ from one year to the next.
So, there are many swings.
But what I would encourage you to focus on is the absolute cash flow, which exceeds net income and is a great indicator of a strong cash-generating Company.
If you look at it indeed, we had a good year in some of these markets.
Overall growth markets, double-digit growth, if you look at all the growth markets.
Again, you've seen in these growth markets some of mature markets' names; I'm thinking about Japan and Australia.
Now, in these, we had very good performance of Brazil last year, on back of some very good programs in Accenture operations and our BPO business, as well in launching innovative services, especially around mortgage as a service, on back of a small acquisition we made a few years ago called Vivere.
And our digital rotation, as well, which is happening in Brazil.
Likewise, it's happening in other places.
That being said, we're looking at the market, as you do.
We understand that the global economic conditions in Brazil are deteriorating at some pace, and it has been factored in our plan.
We have given that disclosure.
I guess we show the revenue number for Brazil.
Brazil is above $1 billion.
Is about $1 billion for Accenture.
So, again, it's significant.
It's not something that will be oversignificant.
And in China, we are around $0.5 billion.
Trending to ---+
China, we're about in the range of $300 million, in that range, so about 1% of Accenture.
The CEO is always optimistic.
I think that we think in terms of continued strong double-digit growth.
35% is a big number.
And for planning purposes, we consider the scale of the Business, but 35% is a big number, and I don't know that we would assume that for planning purposes, not that we wouldn't strive for it.
We plan for double digit.
Certainly for double digit.
I would say that you may remember it was in the ---+ our second quarter's call I mentioned that we were pleased with the progress that we had made in pricing, relative to where we were in the previous year.
And I would say that, relative to those comments, our pricing has remained very stable.
And so, we've ---+ I would characterize the environment ---+ it's tough to paint with a broad brush because it really is different depending on which part of our Business that you look at.
But certainly, overall, the environment continues to be competitive.
If I had to give an overall characterization, I would say stable at the levels that we indicated in the second quarter.
If you peel it back, I would ---+ you asked specifically about application services.
It continues to be a very competitive market, but our pricing is stable.
We see other parts of our Business where we see some pricing power.
And when I say that, I think about Accenture strategy and Accenture consulting.
We don't think in terms of a natural resistance point.
We think that we've got a lot of flexibility for how our global delivery network can continue to evolve, but we certainly don't think in terms of any natural resistance point.
We drive it as the market evolves, and as I said, we've got flexibility still in front of us.
And when you look from a skill standpoint, I mean, you're right to mention that part of the work we're doing in digital-related services could be on shore, however, we are probably the largest ---+ one of the largest enterprise apps developers in the world.
All these developments are being made by our global delivery network, and it's definitely part of digital-related services.
I'm thinking about a significant part of our Business in analytics, as well, being done with our resources, especially in India and other places.
When I think about strong innovations, in terms of automation, robotics, cognitive computing and artificial intelligence, they are coming a lot from the Philippines, and from India as well.
So, I guess it would be a bit simplistic to see our GDN as a kind of low-cost, low-value kind of capability.
It is the right cost, very high-value workforce.
Well, first of all, Ed, I would say that if you look at the performance of our portfolio overall, we're quite pleased with the performance of our portfolio of acquisitions from revenue through profitability and cash flow, and that's something we track very carefully.
We review, certainly ourselves, but with our Board as well each quarter, and we believe we have some pretty high hurdles ---+ financial hurdles for the transactions that we do.
Having said that, as you know, it certainly wouldn't be unusual for an acquisition to be dilutive in the first year or two possibly, but we do ---+ one of our hurdles is the pace at which a deal becomes on par, and then accretive.
But certainly in the first couple years, they can be dilutive.
I'll also point out that where as many other companies in our sector tend to adjust for certain types of acquisition-related costs, the amortization of intangibles, things like performance retention payments at the time of closure, third-party fees, et cetera, we've chosen not to do that, and we report our margin all-in.
To date, our margin expansion commitment has been based on a philosophy that we absorb those as part of our investments, and we drive the Business forward.
And of course, that's just one part of our investment.
We have investments that go well beyond that.
The impressive thing about our profit model to date is that when you look at that 20 basis points of expansion, underneath that we are driving significant efficiency across our Business to absorb the investment to acquisition and otherwise, and that's an important story to understand, so I'm glad you asked that question.
So, to remind you and the other listeners, when we talk about price, and we've always said very clearly that we're talking about the profit or margin percentage on the work that we sell.
And it's in that context, when I say pricing is stable, it's in that context that I make that statement.
So, when you look at application services, as an example, when you look at our margin on work that we are contracting, that is stable.
I mentioned other areas where we have sources of some pricing power; I mentioned strategy and consulting.
I also say that in the context of the margin, but I'll also add that if you were to look at, in that part of our Business, people might talk about things like average daily rates.
We're also pleased with average daily rate progression in that part of our Business, as well.
Yes, so, if you look at our guide for quarter one, the range is 6% to 9% in local currency growth.
I mean, when I look at quarter one or the full year, maybe, <UNK>, I'll just ---+ let me just expand my comments a little bit.
When you look at our guidance, you first of all have to understand what is our assumption on market growth.
And we assume that the market will continue to grow, plus or minus, in the 4% range.
And so, when you look at our guidance for the year, certainly if you look at our guidance for quarter one, the same would apply.
Across that range, but certainly at the upper end of that range, it reflects taking significant market share ---+ continuing to take significant market share, which is our strategic objective.
The other thing that you have to consider goes back to some of the discussion that <UNK> had, I believe, with <UNK> on the growth markets and the risk profile, but also I think when we look at the macro environment in general, relative to where we were 90 days ago, I would say relative to where we were at this time last year, the volatility and risk in the macro environment has clicked up a notch or two.
And so, that's factored in.
The other thing that we think about when we look at our guidance is that it's as important, if not more important, to look at the absolute dollars as it is the percentage, whether it be the first quarter or the full year.
And if you just look at the full year, before you adjust for the FX headwind, just taking that out, look at the underlying growth, at the upper end of our range we would be adding about $2.5 billion of revenue, excluding the impact of FX in FY16, which is a pretty healthy number.
And so, we work hard to drive to the upper end of the range, although the range reflects what we think are the range of possibilities.
And as it relates to the full year, we're early in the year.
As we did last year, we'll adjust as we go.
That was more of an answer than your question, but it gave me an opportunity to share some of those thoughts.
We've not seen much change in the competitive environment.
I think the competition is quite well established in the different businesses we are operating in, from the consulting and strategy with the usual players, then you have the technology with the other players, and then, of course, operations, a different part of our Business.
So, I guess the environment is pretty stable, with some winners and losers, and we are investing and driving our Business to be part of the winners.
But not much to say around the competitive environment.
It's still the usual suspects.
I would say that to the extent that digital has a strong consulting concentration, and if you look at the ---+ let's say, the average duration of a consulting contract versus an outsourcing contract, it would be true to say that the duration is shorter for consulting than it is for outsourcing.
So, in that sense, it does give you a different backlog profile going forward.
We're very pleased with how our strategy in consulting and the development of new technology that we report within application services, that has been a great story for us, but it does change the dynamic, as you're alluding to.
We are still in the midst of finalizing those, and I will comment on that, as appropriate, at IA day.
It's a little premature for me to give you a number at this point.
First of all, we were really pleased with our recruiting in the fourth quarter.
We continue to be, and even more so, a real, I would say, magnet for talent in the marketplace.
So, we had very successful recruiting efforts, as you know.
The fourth quarter is typically when we bring on our campus hires, and so that's reflected in the number.
And so, we manage the supply and demand very carefully.
And one point is where we start the year, and then, of course, we have to manage our headcount as we progress through the year, and we will see how attrition plays out as we evolve through the first half of the year.
We'll see how the revenue trajectory progresses, and then, as always, we adjust headcount appropriately.
Well, it's ---+ as a general ---+ well, it depends.
It just depends on so many different assumptions.
It depends on how we see pricing evolving.
It depends on how we see our revenue yield per head evolving.
It depends on what we might expect with attrition.
It depends on, perhaps we hired a disproportionate number of people in quarter four, and we expect to hire less than normal in quarter one.
And so, there's so many factors that go into that.
I wouldn't over-read the headcount.
What I'd focus on is the guidance we gave and the context that I gave for the guidance.
We actually see very balanced growth, as we have looked at our business plans.
We actually see very balanced growth, and we would see, let's say, both consulting and outsourcing, in the context of a 5% to 8% range, we would see both of those being in the same zone.
So, in the mid- to high-single digits is the potential range for both of them.
Sure.
Thank you.
By the way, Jo Deblaere, who was leading our European business, is in the room, and he couldn't be more pleased with your comment on Europe.
And, yes, I mean, we're pleased with where we are, because you've seen the growth, and of course, when you understand the overall economic environment in Europe, it's much different from the one, for instance, you have in the US.
So, it's more about us than about the market, of course.
And I would call probably the same trend.
It's fascinating to see that the digital rotation we've seen in Europe is as strong, even slightly stronger than the one we could see in the US.
It appears that our target clients, mainly the premium brand in the G2000 we are serving in Europe, are really accelerating their investments in terms of digital rotation.
Second, we had some very significant transactions leveraging Accenture operations with our business process services; I'm thinking about the financing, the accounting, the HR, the procurement as well, and it's been a significant source of growth.
And overall, the consulting is back, probably driven as well with digital-related services.
So, for Europe, again, the clients we are serving more than the geos are reinvesting, with always an eye on rationalization, driving good growth for Accenture operations, and the other eye on growth and digital, which is driving more business for Accenture digital, Accenture strategy and Accenture consulting, and of course, the leadership of Jo Deblaere.
Sure.
Two main reasons: First, and you've seen that in the terminology which has been used by Paul Daugherty, our Chief Technology Officer, we're taking a Cloud first approach.
We are strongly believers that indeed now, and even more moving forward, this Cloud first agenda will be quite prevalent for our clients.
And we want to preempt, to be ahead of the curve, or to embrace, whatever you're going to call it, this new cloud first environment, and so to be a prominent provider in the as a service, software and solution as a service environment.
So, second, when we have defined this position for Accenture, the name of the game for us was how to scale more actively to take a leadership position, especially around the Salesforce.com solution.
And Cloud Sherpas was a very relevant opportunity for us to scale rapidly the good capabilities we have.
As we speak, we are the leader in providing services for Salesforce.com.
We are already the leader, and we believe that through this acquisition they have excellent people, a significant number of these people being certified, which is even more important.
We are scaling faster, and are taking the leadership in this market, which we believe is going to be very promising in the coming years.
Indeed.
It's global, with a very significant and good footprint in the US, but it's global and nicely covering two or three of our most significant markets around the world.
So, we should take this leading position in not only in one, but certainly in a few other markets around the world ---+ very nice fit for us.
All right.
I think it's time to wrap up, <UNK>, excellent.
So, thanks to all of you again for joining us on today's call.
And in closing, I just want to take this opportunity to first thank our clients for the trust they place in Accenture as their business partner.
At the same time, I also want to extend my deep and sincere thanks to the men and women of Accenture around the world.
Every minute of every day, our people demonstrate an incredible level of commitment to delivering value for our clients and for our Company.
And finally, of course, I want to thank you, our investors, for your continued support and confidence in Accenture.
We look forward to talking with you again next quarter, and also to seeing many of you in person at our investor and analyst conference in New York on October 7.
In the meantime, if you have any questions, please feel free to call <UNK>, and all the best.
