About: Accenture is the world’s largest IT consulting and outsourcing company. It counts more than three-quarters of the Fortune Global 500 companies as customers. Its client retention is unusually high and speaks to the depth and durability of these relationships. Likewise, its employee retention is exceptional. In a world of rapidly changing IT needs and potential, Accenture has continuously evolved its offering to stay relevant and valuable to its clients.

Why it’s in the portfolio: Accenture’s size and scale brings with it some powerful competitive advantages. Its geographic breadth and expertise in 40 industry groups or ‘verticals’ has made it the IT outsourcing partner of choice for most of the world’s largest organisations, including governments. Let’s look at some numbers. Ninety-five of the Fortune 100 companies and three-quarters of the Fortune 500 are clients. One hundred and seventy-five companies spend more than US$150m p.a. with Accenture, up from 138 four years ago. These ‘Diamond Clients’ include the likes of Disney, DowDuPont, Morgan Stanley and Pfizer. In the June 2018 quarter alone, Accenture signed 13 deals with a value above US$100m.

Fundamentals: Over the last five years, Accenture’s revenue has grown on an underlying basis at 7% p.a., around twice the rate of IT spending. In the three months to May, organic growth was 9%, including 17% growth in ‘growth markets’, which is primarily emerging markets. Accenture’s growth continues to far outstrip the IT market, its major peers and the growth rate of the economies in which it operates. What’s most important to management is profitable growth – its EBIT margin in 2017 was an impressive 15.2% – the highest for more than 15 years.

What could go wrong?