Investor Day 2011

Apr 14, 2011

Slides

Let me welcome everybody that has joined us on the webcast as well as those of you who are back from our break. I'm Casey McClure, Managing Director of Investor Relations. For those of you who have joined us on today's webcast, you'll be able to find the remarks from the earlier part of the session posted to the Investor Relations section of our website. We expect to have those posted in the next few days. Before we get started, I'd like to remind you that some of the matters we will discuss in today's conference constitute forward looking statements relating to Accenture's operations and results. We wish to caution investors not to place undue reliance on any such forward looking statements. In particular, our financial goals concerning local currency revenue growth, earnings per share growth and our intent to return cash to shareholders through dividends and share buybacks as well as expectations with regard to our ability to grow faster than the market, expand operating margin, command pricing and manage our costs and our effective tax rate are forward looking statements. These forward looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in the presentations, including that our results of operations could be adversely affected by negative or uncertain economic or geopolitical conditions and the effects of these conditions on our clients' business and levels of business activity. The risks also include, without limitations, the risks, uncertainties and other factors discussed under the Risk Factors heading in our most annual most recent interreport on Form 10 ks and other documents filed with the Securities and Exchange Commission. As always, Accenture undertakes no duty to update any statements made in these presentations or to conform such statements to actual results or changes in Accenture's assumptions and expectations. Today's presentations will reference certain non GAAP financial measures, which we believe provide useful information for investors. We will include reconciliations of those measures to GAAP on the Investor Relations section of our website at accenture.com. I would also like to remind you that we will not be providing you with an update for or making any comments related to our Q3 of fiscal 2011 or our business outlook for the remainder of this fiscal year. With that, let me turn it over to our CFO, Pam Craig. Thank you, Casey. And I think Casey gave you a little preview of the agenda in her comments. As I said earlier, it's great to be here with my colleagues, our top leaders, our Global Management Committee, sharing with you the best of Accenture. And I am excited by the opportunities for growth that we see. Our current position of strength is a great foundation to further build upon. So now it's time to sum up our collective view through a financial lens. As you've heard today, we're doing a lot across multiple dimensions of our business to accelerate the execution of our strategy in ways that demonstrate that we are greater than the competition. The great things you've heard about today will drive our growth and profitability and I'll translate that into what we are preliminarily targeting for fiscal 2012 and more broadly the financial goals we are committed to. Before I do that, let me take you back to where we were a year ago. We were coming out of the worst downturn in a generation. Our business was perking up and showing signs of growth. Since that time, we've seen a strong return in demand for our services and the work that the leadership team has done to reposition Accenture is really paying off. We are a very different company and we are gaining market share. There's a buzz about the place. It's an exciting time for all of us to be here and to be part of such a thriving company. 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% over Q2 last year and 16% in the first half of this year, as Pierre mentioned this morning. So let me tell you what I believe is different about this recovery. We took a look at just how different our business is than it was 8 years ago when we came out of the last downturn in 2,003. We've come out much stronger this time. There are many differences you heard brought to life today, but let me just touch on a few stats. We've doubled our revenues. We have 3 times as many Diamond clients, most of whom we've had long term relationships with and managed through the downturn with. We also have almost 3 times as many people, growing from 83,000 to more than 215,000 today. Our long term outsourcing business is now 47% of Accenture. And a dramatic difference, as Kevin brought to life so well this morning, is the positioning we achieved through our global delivery network. So looking more closely at our global delivery network, it represents close to 60% of our total headcount compared to 13% in 2,003, making it much easier for us to scale our services and solutions to the more than 2,100 clients we serve out of the GDN. Last year at this time, I mentioned the parts of our system integration and to a lesser extent, our application outsourcing portfolio we're at different stages of transition with work shifting from onshore to our global delivery network. This transition, largely driven by demand, continues as we had planned over the medium term. We are on track, as Kevin said this morning, actually a little ahead of where we thought we'd be in terms of the mix shift as well as in revenues and volumes. So to summarize, the durability of our business came through the cycle and positioned us for strong growth. Our financial discipline and ability to navigate and deliver results in a world of uncertainty is proven and our strategy has been validated through the strength and pace of our recovery. So let me turn now to our financial goals. Everything you've heard today gives us confidence about the financial goals we hold near and dear, and we are committed to them as we drive our business forward. The first is about revenue growth, where our goal continues to be that we will outperform the market. The second is about earnings per share, where our goal continues to be that we will grow EPS in double digits. And the third is about maintaining a strong balance sheet and generating strong cash flow and to return a substantial portion of that cash to shareholders through dividends and buybacks. So beginning with revenue growth, let's first look at the market growth for our services. Our projected addressable market again this year includes forecasts for management consulting, technology and BPO revenue growth. We rely on an external analyst data from both Gartner and IDC for these estimates and then we consolidate a view that lines as close as we can get it to our addressable market. Over the course of the next 3 years, our fiscal 'twelve through fiscal 'fourteen, the addressable market growth, which reflects an assumption for GDP growth over the period, is estimated at 5.4% on a compounded basis. The highest growth is projected for Management Consulting followed by BPO. Based on this analysis, our addressable market is expected to grow by 4.9% in fiscal 'twelve. Management consulting services are estimated to have the highest growth at 6.2 percent followed by BPO at 5.8% and technology at 4.5%. So as you saw on the prior slide, the market growth is estimated at about 5% for fiscal 'twelve, little under. We are targeting 7% to 10% net revenue growth in local currency for fiscal 'twelve. We are in the early stages of building our detailed plans. If there's one thing that my colleagues in the Global Management Committee sitting right here, in the first couple of rows is focused on, it's delivering. And I think Kevin has taken mental possession of the upper end of the range. We have a lot of analytics on our fiscal 'twelve growth. Certainly, we have considered the macroeconomic environment we operate in today, but we've also looked at the health and durability across our core business, at how our strategic new businesses have been taking hold and at the development and rapid growth potential of our emerging geographic markets. Also, I should note that our target of 7% to 10% includes a level of acquisition activity consistent with our tactical tuck in strategy. Any acquisition of bigger scale has not been factored in. Growth, 1st and foremost, comes from our core business. Our core business is very durable and diverse, which differentiates us in the marketplace and positions us as an industry leader. We have and will continue to grow our business largely organically. And at the heart of that is a very vibrant core. We still see a lot of white space in the core. We heard a lot about that in the many examples shared by those who presented earlier today. Now the second source of our growth is our strategic new businesses. And you heard a lot about those today too. And these are the ones we're giving special focus to and are building on top of our core with the expectation that they will become part of our core in the future. We told you first about these at our Investor and Analyst Conference last year, and these include the examples on the page: digital marketing, analytics, mobility, software, cloud, insight driven health and smart grid. Each of these represents areas where we believe we are uniquely positioned as they are already making a notable contribution to our growth in fiscal 'eleven. A significant portion of our investment capacity and funding is directed toward these. But our innovation does not stop with these though, and there will be more to come. Now as proof positive of our ability to build $1,000,000,000 businesses, an example I'd like to highlight today is Avanade. Avanade is a joint venture with Microsoft, majority owned by Accenture, which we began about 10 years ago. Let me share with you some highlights. Avanade has grown 35% on a compounded annual basis since 2,001. It is margin accretive and will exceed €1,000,000,000 in revenue this fiscal year. It has over 13,000 employees and operates in 60 locations in 27 countries. And most importantly, it's the number one integrator for Microsoft products. So let me turn now to a third area of growth, and that's in our emerging markets brought to life today by our speakers on the telepresence. Looking back at 2,003, when we came out of the last downturn, we had a much larger revenue concentration in the U. S. And the U. K. Versus today, where we are more geographically diverse and more developed in Eastern Europe, Asia and Latin America. Today, our emerging geographies represent about 13% of our revenue base with a revenue growth rate that is significantly higher than our average overall. They will continue to be strategic to our growth, as you heard so well articulated today by Roger for Brazil, Gong for Greater China and Avi for India. Over the next 3 years, we expect our business in these markets to double in size. So that's a little bit about revenue. And let's turn now to our second goal, profitability. We remain focused on driving growth at the bottom line and our target for fiscal 'twelve is earnings per share growth at a minimum of 12%. Our history tells a story of strong and consistent delivery of earnings per share growth since our IPO. Now let me spend a little bit of time on how we will accomplish this and our underlying assumptions. Starting with operating margin, we are confident in our ability to continue modest expansion of our operating margin and to do it in a way that is thoughtful and sustainable as a key component of growing earnings per share. It has been and will continue to be a primary performance objective for the Global Management Committee and their leadership teams. We will continue to work this, 1st, by having rigor around the quality of contracts in our portfolio. Our ability to command pricing through differentiation is key. 2nd, by focusing on our labor costs, our biggest operating expense. This means strong management and balancing of market relevant compensation, the right levels of utilization and payroll efficiency. 3rd, by staying committed to our industrialization agenda, our methods, processes, tools and of course, leveraging our global delivery network. 4th, by redoubling our efforts to drive down our selling costs as there are still opportunities to drive efficiencies there as well as in G and A. And lastly, by carefully managing our investments in our industry and technology programs that you heard about today and in our strategic new businesses that I mentioned a moment ago. We have many levers to improve operating margin, but we need to pull those levers in a way that supports our business in the long term. There's always a trade off between investing in our business and margin expansion. We will balance these priorities in a sustainable way to drive profitable growth into the future. Now turning to the tax rate, a little less exciting, but it's been leveling off at 28%. We believe this will continue at least for the next couple of years. And this does not include the impact of future final determinations, geographic mix changes and other items that may impact the rate each year. In terms of share count, we continue to expect about a 2% to 3% reduction in our average diluted shares outstanding as we plan to buy back stock at a faster pace than share issuances in fiscal 'twelve. So last and third, our third goal is to deliver a strong balance sheet and cash flow and to return a substantial portion of our cash to shareholders through dividends and buybacks. Specifically, in fiscal 'twelve, we expect to return cash to shareholders of at least £2,800,000,000 and this is one area that really differentiates Accenture from the pack. When you look at our history, we have been a cash generating machine. Now our principles about acquisitions and CapEx remain largely unchanged. We are capital light and cash remains king, and all of us here are laser focused on generating strong free cash flow. We also continue to be a company that grows primarily organically in different parts of the world and in the different sectors of our business. When we do look at acquisitions, our strategy is about gaining skills, assets and intellectual property that enable us to differentiate ourselves and enhance or expand our capabilities in specific service areas, industries, geographies or new markets, consistent with our tactical tuck in strategy. We've returned 94% of free cash flow to shareholders since our IPO. We will work with our board as we always do on the appropriate level of our dividend and share repurchases so that we can return a significant amount of free cash flow to our shareholders consistent with that history. So to summarize, we have financial goals to grow revenue faster than the market with 7% to 10% as the objective for next year to achieve earnings per share growth in the double digits with at least 12% as the objective for next year and to continue to deliver a strong balance sheet and cash flow and to return at least €2,800,000,000 of our cash to shareholders through dividends and buybacks. The importance of our clients, the relationships we have with them and the value we deliver to them remains paramount. Their demand for excellence makes us raise our game in developing talent, building our service offerings and delivering outcomes. Operational and financial performance underpins everything we do and we do this with superior leadership and management. Our track record and the broad based demand we are seeing speaks to our unique positioning and durability, things we expect to build upon and strengthen. In my view, we are as well or better positioned for the future as we have ever been. With that, we'll open it up and take some questions, Pierre and I. And we may call on some people here in the front row, or you may ask us to call on some people here in the front row. So we're looking forward to that. And as long as the first question isn't on foreign exchange, we can no. The foreign exchange assumption, just so you know, is we haven't done that yet. We're just assuming it flat with this year, and we will update it on you on it in September as we always do. So that to loosen you up a little. Tien Tsin? Hi. Hey. You will have a mic in a minute. Thanks. This is Tien Tsin from JPMorgan. I wanted to ask, I guess, the on the GDN side. Obviously, a lot of the heavy lifting there is done. It's now the majority of your headcount. I'm curious as you're thinking about your planning, what the implications are for margins, not only margins but also revenues and if you can share any numbers around revenue margins within the GDM, help us frame that, that would be helpful. Not going to do that, but let's have Kevin give you a little on that. So as we've talked about before, the journey it's a journey in the GDN, right? And I think while we've made very good progress relative to our goals, each time we do that, we tend to see that we can do more, right? And so as far as the margins and all the other things, you go back to what Pam says, right? It feeds into all the levers that we have and the trade offs that we make all the time. But I think we see we still I don't feel like there's the heavy lifting. We're not done. I don't feel like it's done because now there's so much more potential that we could do that'll give us more industrialized the things that I talked about. Another question? Yes. Thank you. George Price from BB and T. Could you give us maybe some assumptions behind the growth in terms of consulting versus outsourcing, maybe geographically, even within some of the components of consulting, where you think the growth is going to be driven from what the mix of the business is going to look like? Well, geographically, as I mentioned, we do believe, especially in the emerging markets, we are looking for higher growth than the rest, and I quoted some numbers for you there. So definitely, that's in the mix. In terms of consulting and outsourcing, I think you can expect that at least at this point in time, we see the mix being similar to what we've experienced through this year. That's the way the pipeline is shaping up at this point. Brian? Come on, give Pierre a tough one. So I can pass to the first row. Yes. So we can pass it. It's a very tough one for Marley. No. It's Brian Keane at Credit Suisse. I guess just interested to hear a little bit about the pipeline, the qualified pipeline, what are those growth rates? And when you guys talk about sustaining the momentum, last year you started at 7% and 10% in constant currency and you obviously did a lot better than that. So I know I'm going to get the question about how conservative is that if you're sustaining the momentum, can you do better than that 7% to 10% depending on what factors should we look out for? Well, I'll do a quick one on the pipeline, and then I'll let Pierre drop. The pipeline is up from last year. It's up about, I don't know, round numbers 12%. So I mean, certainly, we feel more confident around I mean, last year was more uncertain, not that there is a lot of stuff still going on in the world, right, but just in terms of the economy and all of that. So we do see pipeline being stronger. But we try to take into account everything, right? And where we see it, I mean, these guys all did detailed plans that were not detailed plans. They rolled up stuff in terms of where we are in the process. The detailed planning comes next. But this is where we see it now in terms of our business for next year. And it takes into account a lot of things, macro stuff as we see it today, as well as how these businesses will grow over the next year. Yes. No, I mean we put a lot of analytics behind. So we look at our different businesses. We consolidate all those information. So that's what we're doing internally. Then we're looking at external data. This is what has been presented with Span, understanding where the market is going and then you need to factor what we know regarding the environment. And the environment, has got a little bit as you've seen more volatile these last years and probably will stay so in the coming couple of years. So when you look at all those information and you, of course, need to keep in mind that the compare between next year and this year are going to be as well different quarter to quarter. Then we feel that indeed this 7% to 10% is the right place to get started. And as mentioned with Pam, we probably have a kind of mental model when we set a range that we want to get for the right size of the range, as Kevin would say. Upper, right. David? Thank you. David Togut, Evercore Partners. Could you comment on trends you're seeing right now in unit pricing across the 3 businesses? And then on the other side of that, what are you seeing in terms of wage inflation? I can start with the pricing, and you will take the Yes, we can let these guys drive. The wage or we will. I mean, this is something we're tracking extremely precisely quarter after quarter. I think we I mean, the minimum we could say is indeed we've seen now the price stabilizing For the last quarters, this is where we are. So indeed, we are not seeing any more pricing going down, which is the first good news. Now and we need to remain a bit cautious and look at what's going to happen in the coming couple of quarters. But probably these last two quarters, we're starting to see some sign of improvement in some of the pockets of our business. Probably too early to declare a victory on this, but at least we're pleased with the first stabilization of the pricing and we're starting to see some evolution. We're tracking that and probably in 2 quarters from now, we'll see what's going to be the trend. I don't know, Sander, do you want to comment on management consulting? Yes, Pam, of course. On management consulting, what we see is the prices, I would say, stable to up. I've been talking to a couple of you already in the break. Getting the prices up is extremely high on our agenda, but it's at the same time, it's also hard work. It's one client, one project at a time. And we're doing everything we can to move them in the right direction. Yes. I mean, I think just coming out of the period we were in, right, the confidence of pricing is what's now coming back. And that then needs to work its way through and yield. But that's sort of the feel. And then, I'm sorry, wage inflation, what are you seeing in terms of general wage trends? Well, I mean, I don't know. Kevin, do you want to comment on India? We can but this is like our job, right, to deal with that? Yes. And it's the answer is complex because obviously, the market relevant compensation, which is where we are trying to be with all of our people, is important. But it's only one of the levers we pull in the overall productivity, the other non labor costs and things like that. So the I think we've been happy with where our attrition numbers have been. We always want them lower, but I think they've looked pretty good. And we're working hard now to figure out what we need to do for next year. So there are certain skills, there's no doubt that are in demand that things are up. But I think it's more a skill based thing rather than anything relative to an overall trend. But again, it's something we're looking in an extraordinary and granular way, not only business by business but almost skills by skills and country by country. And Jill Smart, our Chief HR Officer, she's the team captain on this to look at how we are managing our compensation in a way which on one side are going to be attractive because we need to provide attractive opportunity for the people and on the other hand, which is going to be affordable for us. And that's the equation we are working on every year to be totally market relevant but to make sure we will recover from the marketplace in terms of pricing and condition. And I mean so far we are striking the right balance. Yes, we're going to move from left to right, if you will. Yes, I've seen it. We can start with Adam. We've got one over here. Sorry, we've got a mic here. I've seen you. Okay. Adam Friesch from Morgan Stanley. I have two questions for you guys. First on giving a perspective on where we are in growth. You've both been in this business for between 2030 years, both starting at the company when you were 8 years old. But where are we in perspective? There's always a cyclicality perspective in what you do and there's also a secular mentality or perspective in what you guys do. So where are we in the next 5 years versus some other times of big growth? And then I have a quick follow-up as well. Thanks. Sure. No, I mean, when you look at it and this post financial crisis environment, it's really difficult to say we are post crisis because there are all sorts of different crisis in the world. But at least the big one between the banking and the financial crisis seems to be behind us. So we can state that based on what we see, I mean, internally with our clients because this is where we're starting from, looking clients by clients, what it is they're planning to do, what it is they have in mind, looking at all those trends. I mean this globalization is not here for the short term, it's probably here for the long term. All this increasing regulations thing is here for the long term as well. All those technology waves are not here for the quarter. Now here, as mentioned, we've done probably for the decade and we will see the impact. It appears that the conditions are being put together to signal that we are more at the beginning of a cycle. So that's the way we see that that we are more at the beginning of a cycle because all those business and technology trends are profound and should impact our clients for the mid term to the long term. Okay, great. And then my follow-up was kind of the financial aspect, how you view the next 3 to 5 years in terms of your financials, not getting into specifics about specific growth rates or margins. But if I look at where the company how the company is growing and where it's growing, your cost of delivery is going down. You continue to differentiate on the more value add stuff, whether it's management consulting or otherwise. Those businesses are higher margin growth or higher margin businesses, right? So that delta between revenue growth of higher margin businesses and lower cost of delivery, the bottom line takes care of itself through what you generate plus on the buybacks. But that delta between that revenue growth, lower cost of delivery, what's happening to that gap? And if you could maybe expound on where you're investing, how you're investing, are you investing more in variable comp to keep your people in the seats because that's obviously a big factor for growth as well. What's kind of happening with those key factors there as we look at the model over the next 3 years? Well, I mean, just in terms of I mean, we do have a portion of our comp that is variable comp, but I would not characterize it as more on a relative basis. I mean, it's still an important part of our comp and there is a piece that's very much based on there are pieces based on individual performance as well as company performance, and that's still in place. I think the primary thing is, as I had mentioned on the investments is that we do see places where we do need to invest, either in market development or in the kinds of things like what Marty talked about with mobility, right? And so we do believe that we need to invest in those things so that we're positioned for those waves and positioned to ride them. And that's one thing that we did in this repositioning was to learn that and say, okay, we need to do this better than we've done before. So philosophically, and when Pierre uses the accelerate word, at least that's what it means to me in terms of having that focus on where we indeed do need to accelerate in some places and have the investments linked to that? I mean you can see 3 buckets on where those investments are coming from. And for you, the first is in our people. And we need to hire the best people, to train them, to deploy them, to make sure that they have unique skills. So that's a significant part of our investment we're making. And of course, we're making that in a thoughtful way and making sure that from a comp, we are again very thoughtful in the way we deploy our compensation to fix the variable. And we're looking at this business by business because the compensation structure might be different from management consulting to technology or to BPO and other part of the business, not mentioning the countries. I mean the second type of investment in the investment we're doing is now differentiation. That was the big thing of this morning. If we want to continue leading in the marketplace, we need to continue differentiate and proposing things the competition couldn't propose. So it's all the program we have on our investment. And as you've seen, our strategy moving forward is to be extraordinary, focused, targeted in some industries. We're going to continue operating in multiple industries, but in some industries, in some capabilities, in some geographies, as mentioned with PAM, you've seen the 10 country markets we are investing in. And probably the last part is investing in our own competitiveness. And probably differentiation and competitiveness are 2 things you're going to hear a lot from that group because moving forward, we want to remain as competitive, if not more competitive than anyone else in the marketplace in each and every business we're operating in. We want to be more competitive than anyone else in BPO. And that's why we are today winning in this F and A BPO where we are now the number 1 and building on a regular basis the main competitors in the marketplace. We need to invest in the delivery centers to be both productive. That's all the job from Kevin, I mean tracking productivity, which is not only labor cost. It's all the tools, the techniques you're going to put in place so you're extraordinary competitive. So people, differentiation, competitiveness, that's where it's going. How about that? I think up here we have the Yes, we have one with the mic. Okay. Thank you. Luma Socia, thanks for taking my question. You mentioned the word competition a couple of times. Maybe you could go into a little bit more detail, give us some more color on that. Obviously, you guys sound very confident. It sounds like you're gaining share. You must be gaining share from someone. So maybe if you go into the 3 different businesses and just say how it's maybe changed over the last couple of years and where it is now and maybe who's the toughest other ones out there? Thank you. Yes, I can make a kind of broader statement and then ask Kevin more from a technology perspective or Don and Sandler from a management consulting. But indeed these last few months, we've been gaining market share across the patch. So and we're pleased with that because of course we're gaining market share. But we're pleased with that because it means that our differentiation is playing in our favor and is recognized with our clients. So when it comes to, for instance, the what we used to call the Indian pure players, indeed we are as competitive as they are and that's all the role of the GDN. But indeed, we are more involved in mission critical programs. So that's the way we are driving the competition, be as competitive but deploying to different solutions. When it comes to the management consulting, indeed now with 16,000 people, we are the largest management consulting company on the planet. But again, as mentioned with Sander, we want to be even more differentiated in the different activities we have. We are leading in the M and A space. And I think you heard how many M and A we've been driving this last year, which is just phenomenal. We are unique in how we combine CRM and analytics. All the risk and regulatory management, all the BPM are new activities we are developing to remain in MC at the intersection of the consulting that has been done with some of the pure players, but with the kind of pragmatic execution and then we are adding the value based engagement. So again, we are as good as any of the players in those quadrants plus adding our specificities, value billing and unique combination of consulting and operation. And then you have the global thing. Our clients are giants. They are operating on a global basis. And at the end of the day, very few companies or competitors could support them on a global basis. And when I say very few, I probably mean very few, probably on half my hand at best. So that's our positioning when many of the other competitors are much more local, European, country based. But so far, no one else except for everyone been able really to deploy the capability on the global basis. So we're combining this global thing plus the MC and the technology and you put that with our extraordinary price point. And indeed, we are navigating well the competition. But maybe on technology, Kevin, you might say a few words. Sure. I think there's 3 sets of competitors we look at, right? There's the hardware and software manufacturers that all have services arms. As we said, we believe our technology independence is a unique positioning for us. And we think that is more important today than it ever was. The second set is the former accounting firms or still accounting firms that can come after us in specific areas and specifically in management consulting, technology consulting and things like that. We believe our implementation experience and being able to take people all the way through it is a unique differentiator relative to them. And our ability to understand technology and run the technology to be able to live with what we say is a huge difference. And then we've got the offshore competitors. And the offshore competitors, Bill said last year, and I think it's more true this year than ever, which is we've proved that we can go down market and meet them at the price points they have offshore. They have yet to prove that they can come up market, do the big complex work and build the industry experience at scale in a global environment. So I think those are the things that we would say. Yes. Thanks. Darren Peller from Barclays. Pierre, you just mentioned around the or Kevin just mentioned the offshore competitors are obviously good competition, but you can move downscale a bit. With 57% now of your business in the GDN, can you just compare and contrast the growth rates you're seeing in your GDN business versus some of the off source players you see in the market? We don't provide that. But at least at this point, I'd stack them up. I mean, I think we're quite competitive there. Yes. And as you know, we are not considering the GDN as an industrial player. That is not the positioning of the GDN in Accenture. The GDN is a unique capability we developed with an amazing productivity and competitiveness to support the business we are doing in Accenture, which is more at the intersection of the consulting, the transformation program or the operational program. So that's why we do not want to some extent to fall in that place where we would compare like to like our GDN with the Indian pure player. This is not the positioning. So again, we want to be as competitive as they are. And to some extent, it's been good. They've been showing up a few years ago between been pushing us of doing what we did. We are very competitive, but we are pulling that competitiveness to deliver something which is extraordinarily different than what they are doing. Okay. And then just one follow-up. On the growth of your headcount, 60,000 people is a great, great achievement. And going forward, obviously, of 250,000 people, can you just comment a little bit on the capabilities of growing your headcount and what kind of numbers we should be seeing? We have the master here. She's been dying to, like, answer a people question. So let's let's let her do it. Jill, I'll take your call. Come on up here, Jill. Come on up here on the stage. Oh. Come up here. Okay. Well, thank you. Yes, I love to get that question and many of you asked me that. I'm very confident that we can continue to do that. Somebody said we couldn't keep doing it and yes, we can. It's a core competence of ours. And we have the proven track record. What's the challenge is to make sure that we know what we need, how many, where, when, what skills. That's the challenge. Getting them once we know that isn't the challenge. So we work very closely together. We also excuse me, we also monitor, our retention, demand that we have both now and in the pipeline. We look at our chargeability and utilization, and we do a lot of analytics so that we can get the numbers right that we need, but then getting them is not the problem. Thank you, Jill. And she has endless energy to do it. Great. Where are we? Yes. We're going to start with you and then me. Okay. Hi. In one of the presentations earlier, you all had talked about performance based payments and having skin in the game. And I was just wondering if you could help give us some perspective on how that's changed versus 3 or 5 years ago, if the performance based payments are a bigger part of your contracts and what that means for profitability over time? Thanks. Just as a matter of an intro and then Sander will answer that one. Indeed, we're infusing that in a way which is extraordinary cautious and when relevant and making the difference and where indeed we have bulletproof solution so we can put some skin in the game. So it's something we're doing on top of in addition. So it's, as we speak, not a significant part. It's an element of our differentiation when we felt confident enough that we can use that weapon, if you will, to make the difference. But Sander is the master of this. Thanks, Pierre. With respect to skin in the game, I think first, you should all remember that we always had skin in the game in terms of delivering projects. We were never like a body shopping company just delivering people. We always had skin in the game with respect to delivering projects. So most of the work, we have skin in the game in terms of what we deliver. Our clients are more and more asking for us, okay, well, that's interesting extension, but now we need to see the real value. And given that we are very confident in areas such as procurement, telecoms, working capital, all that kind of stuff, we have seen it for many, many years in all those areas and we know what clients can do. So we're confident to be able to say, clients, you pay us X and if we deliver the value, you pay us X plus. It's a differentiator for us in the marketplace. Not many of our competitors can do it because they don't have the consistent capability with confidence to deliver those benefits. And it works really well for us, obviously. As Pierre said, we have to make sure that we manage the risk that come with it on a very tight and day to day basis and that's what we're doing. I mean just in terms of the trend, I mean, there is more demand for value out there in this environment during and post crisis, right, value for money. So this just works really well. And just how we've worked and built up skills and things over time, we can then have the confidence to do this on a deeper and broader basis. So it's kind of a good thing happening in terms of macro and what we can do. Over to you. Yes. Joseph Foresi from Janney Montgomery. Hey, Joseph. With guidance, could you what are your assumptions around pricing in large deals for embedded in that guidance? And then I just have one follow-up. Well, we're probably not quite at that point, just in terms of that. I mean, when we do what we do till now, right, we triangulate a bunch of things, the macro things as well as in each of the portfolios like the one Marty runs, right? We look at their industries, their geographies, their diamond clients, how those are going to build, the offerings and just kind of do all that. And I mean, in the end, right, we expect the right level of pricing. And then that and that that's what's going to happen in terms of how those then manifest themselves into the actual work. Okay. And my second one, you talked about being ahead of plan maybe in the build out of the global delivery network. Yes. Is there any changes in the I know we've talked about delivering margin expansion. Should we think about that as potentially slowing that you're ahead of pace or should we think of it as in the same historical context that we always have? In terms of the operating margin expansion? Yes. Yes. I mean, I think the only point about the shift is that the shift is a little ahead. Volume and revenues were also ahead of what we expected last year. But that doesn't change because I tried to go through sort of all the levers. And in the end, we're managing to modest margin expansion, and that's one of the things in the mix. We have one question on the left the right here. Thanks. It's Jamie Freeman at Susquehanna. Hey, Jamie. I wanted to ask about the dividend. I think investors are grateful that you have moved I love that word. Yes, you moved annual to semiannual. And in an ambitious way, you raised the semiannual right out of the gate. But this time around, you didn't. And you, I think, explained that you have an annual practice of treating your semiannual. My understanding is that's not, the best practice in the industry. I want to get you to kind of address what's your appetite for the dividend? And would you consider actually making semiannual adjustments the way some other companies do in industry? Thank you. Well, I mean, we still view the dividend. And as you know, we work in the summer and the fall with the Board to declare the dividend. And I think that when we do the capital allocation plan at the beginning of the year, I mean, the idea is we went from the annual to the 2 pieces of the semiannual. And we certainly never suggested that we were going to raise the 2nd semiannual. And I don't view that as something that we would necessarily do, but we will review all that with the board as we plan for this next year with the next semiannual kicking in, in the fall and then how that would manifest itself through the year. Another couple of questions here. We have one in the center. Ken Zuckerberg from Trane Babcock. Pierre, could you talk a little bit broadly about the Japan opportunity? Obviously, post the ban, it seems like there's lots of demand for goods and services that you all can provide. Thanks. Yes. No, I mean, thank you for the question, and it's giving me the opportunity, I mean, to mention our colleagues in Japan. And I think it's Paul and I will answer your question because indeed, we've all been following what's going on here in Accenture. It's been every day, we had people taking care of what's happening. And to be honest, and I hope the lesson maybe to the webcast, I hope people in Japan, has just been extraordinarily amazed by the character and the courage of our people in Japan in Accenture but probably all the people in Japan. And what they're demonstrating under those dramatic circumstances, it is just amazing. Now when it comes from an Accenture perspective, of course, this is something we've been considering and which has been factored in the element of our target. The good news is all our people are safe, 1st. And second, they're all at work, which is just a demonstration of what it is in the DNA of that country. Now that being said, indeed that country will go through a massive reconstruction. And through that massive reconstruction, we believe that there are going to be opportunities for a company like us. And I'm mentioning a company like us because in Japan, it's the same story as in Brazil, we have a lot of Japanese. And during the crisis, they're clearly making the difference between the people who've been staying there, showing resilience and courage and all our close to 5,000 people, I mean 5,600 people been there, Japanese, of course, supporting with their colleagues, but a lot of Japanese been there at work when some other consulting firm or whoever been asking their people to come back. No critics from my side. I mean everybody's charging what they have to do. But we know now that clients probably will a little bit recognize the people who've been there. We are in Japan. And so we expect that indeed they will rebuild rapidly 41st for Japan because we need a strong Japan in the world and we want all of them to recover quickly. And then from a business perspective, because it's more your question, we believe there's going to be opportunity. The big question as always is when. It's not so much what we know that's going to happen. It's when that kind of thing will kick. Is it a question of months? Or is it a question of quarter? But inevitably, reconstruction will happen and we will participate in Accenture. Thank you for that question on Japan. I really appreciate it. Moshe Katri with Cowen. Going back to the headcount topic, Pam, can we get an actual number for a net headcount addition for fiscal year 2012? And then can we kind of get a feel on how many will of that number how much of that number is going to go through the GDN? Yes. I'll post you on that motion in September in terms of the exact number. But obviously, with revenue growth, we're going to need people. But we're just not prepared to give you that number today. But we'll get it to you, and you can plug something into your model and see if it works. Understood. And then and should we expect more should we expect more maybe some sort of a pickup in hiring on-site versus offshore compared to where we have been hiring in the past few years? We did see a pickup in on-site hiring this year. And so that's already happened, and you will see continue to see we expect a balance. Okay. And then kind of on a different topic, outsourcing bookings picked up last quarter. Let's assume if that is a sustainable trend, should that be margin dilutive down the road, should be neutral, what should we expect that to do to margins? Not necessarily. We as you know, we operate the thing to operating margin and with this overall modest expansion in operating margin. So that all goes into the mix. And some of our outsourcing work is very profitable. Yes. And we I mean, that's something we like to recognize. Mike, Salvino is driving the BPO because indeed, he demonstrated that with the proper restructuring of our portfolio, we've been able to drive our margin up in a very significant way. So again, it's all about the competitiveness, the focus you're putting. And so far, we are very pleased with the margin we're driving from both AO and now BPL. And I also said I expected the mix to stay about the same next year. Julio? Final one. Final already? I don't know, maybe 2. A good one for for our people here. So, Julio, let's go to you. I have a tough one for Pierre. Can you explain to us the current state of French football? I'm not sure we have enough time. That's too long. So, either I'm taking much more time where I say no. We are probably not on our best. Notably missing from But we are recovering. We are recovering, and we're going to be at our best for the next World Cup where we're going to definitely crush the rest of the world. You heard it here. Seriously, the real question is But we Probably coming time, but Seriously, on the I guess on the question for us, I mean relative to the numbers that you guys are showing in terms of where your offshore is heading almost 60% of the headcount, and I think even kind of back to Adam's question and some of the other questions we're hearing, why not expect more margin expansion from you guys with the amount of headcount that's coming from offshore? And benchmarking against some of the other guys at the low end of the margin curve when you look at even Cognizant, some of those guys, they're operating at definitely much higher operating margin than you guys. So your global delivery, a big part of your business, why not expect more from the margin side? Well, we do expect some from there. But remember, Julio, we're not a cognizant we're not we're just not those companies. We're a completely different company coming from a different place moving to a different place. So I know we get the question over and over again. I mean, I think we're extremely pleased with what we call cost to serve in terms of what we're doing in our global delivery network. And as Kevin said, it's a journey. We're going to continue to drive that and continue to expect more. But at the same time, there's a lot of other pieces that we're managing as well. So it's not that it's not there. It's just that we manage the business to operating margin. I think we are getting a bit How are we doing on the table? That's top of the Did we miss anybody? No. How perfect. Okay, good. I mean, that's fine. So just maybe let's take just a few minutes to close. And first, thank you for joining us here live in New York and for the people who've been with us in the webcast. We do really appreciate the time you're spending with Accenture in working with us and sharing with us your views on the business. I hope you found this morning interesting and of course insightful and convincing on what it is doing in Accenture to drive differentiation and to drive growth and to drive our business. There is one thing or one simple sentence I would give you to summarize the morning is just we feel good. Oh I feel good as the song would say. I feel good. We feel good about the business. We feel good about the strategy. We feel good about we are putting our act together to differentiate ourselves from the competition. We feel good that we are executing with an amazing discipline. And we feel good because we're operating with passion. And that's probably what's going to make us extraordinarily different. Now of course what's most important on top of that is our people. So I would like to recognize I mean the 250,000 people working in Accenture, but probably here I would like to recognize that group which is with me today, which is our Global Management Committee. For me it's just a privilege, a true privilege to be not their leader but their team captain because just believe me, this is the best leadership team in the industry. And for me, it's an amazing pleasure to work every day with all of them. Thank you for coming, and I hope you will enjoy as well our lunch where we'll have further discussion. Thank you very much.