Accenture plc (ACN) recently announced that it has successfully completed the first phase of an outsourcing project for a forwarding and logistics services provider, Panalpina Group. The 7-year deal between the two was signed sometime in October 2010 and we don’t have any information about the deal value. Per the deal, Accenture will provide outsourcing services to Panalpina’s various operating units.
Switzerland-based Panalpina deals in freight and logistics services across the world. It specializes in providing supply chain management solutions encompassing intercontinental air and ocean freight shipments. Managing business in such a bigger scale calls for some business challenges. Panalpina was finding some support to set up a centralized sourcing arrangement that would bring economies of scale as well as enhance transparency in spending, capacity to negotiate and efficiency.
Panalpina found Accenture’s finance and accounting (F&A) business process outsourcing (BPO) solution suitable for its business and leveraged it to consolidate and standardize finance processes across its global operations, while reducing cost burden to a great extent. Initially Accenture designed a pilot operating model for Panalpina’s finance function, and now provided all-inclusive F&A services in 14 languages and 23 European countries, the U.S. and Canada. This covers more or less half the finance and accounting practices at Panalpina.
We find Accenture’s long standing relationship with Panalpina encouraging. We also think that success at Panalpina’s arena could attract similar deals from the transport sector.
Accenture’s deal prospects look bright. Moreover, the company’s endeavor to expand in Asia is also encouraging. With the west facing threats of a double-dip, all eyes are now turned toward Asia. With the continuous emergence of hi-tech innovations there, Accenture could ink deals in technology services, as well as outsourcing and consulting services. But increasing competition from IBM Corp. (IBM), a strained spending environment and its broad European exposure may temper growth to some extent.
Currently, Accenture has a short-term Buy recommendation, denoted by the Zacks #2 Rank.
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