Even as the economy continues to show signs of recovery, businesses remain reticent to expand payrolls. Instead, they’re investing in new technology and solutions to enhance the productivity of their existing workforces.

As corporate revenues have suffered in the down cycle, companies have pulled in their horns and, in many cases, instituted draconian cost cuts to build cash positions. These measures have left corporate America with an estimated $1.2 trillion of cash on the balance sheet.

Under normal circumstances excess cash would be used to re-staff after a prolonged recession, but this time around is likely to be different. Economic growth should be subdued for some time, and consumers are already showing signs of rationalizing consumption. That leaves companies with little incentive to hire, especially because adding staff entails additional costs beyond salaries.

Going forward companies are likely to invest that money in productivity enhancements–for example, upgrading information technology infrastructure and physical plants, engaging consultants to streamline businesses and outsourcing routine office functions.

Typically, it takes an outsider’s eye to find ways to squeeze greater efficiency from a business.

Accenture (NYSE: ACN), a global management consulting and technology services company with operations in 49 companies, has provided businesses with that outside perspective for years. Focused on helping clients enter new markets and maximize performance in existing markets, Accenture also assists companies in outsourcing operations.

Full-year revenues declined 8 percent from a year ago, largely because of currency fluctuations, and income generated by company’s consulting business likewise slipped as smaller clients put off larger projects. Accounting for about 58 percent of total revenue, any fluctuation in that business line has a big impact on earnings. But Accenture enjoyed strong growth in services to state and local governments; its public services division grew revenues 11 percent from the previous year. Outsourcing, a popular cost control that accounts for a large share of Accenture’s earnings, grew an impressive 6 percent.

Currently priced at just 16.1 times earnings, the stock trades at one of the smallest premiums to earnings growth in the industry. And given that growth in bookings has held up much better than expected–Accenture locked in $23.9 billion of new business last year–the company should benefit as the global economy continues to recover. Corporate spending on consulting services has actually been on the rise in recent months, with management teams increasingly bringing in outsiders to find ways to squeeze efficiency out of operations.

Accenture itself is extremely secure from a financial perspective, boasting over $4.5 billion in cash on its books and $3.9 million of free cash flow. The firm has little debt, owing just a little over $8 million to various creditors. The bulk of its revenues are also generated overseas, primarily in Asia, offering a measure of protection from continued weakness in the US economy.

The company also has streamlined its own operations over the past year, trimming its global real estate capacity and reducing its staffing levels to better meet business demand.

And throughout the economic turbulence both insiders and institutional investors have remained net buyers of Accenture shares, a strong signal that management remains in their company.

Accenture still faces challenges–chiefly that continued economic weakness could continue to weight on consulting revenues. But a fraction of the company’s consulting business could be classified as discretionary, so revenues should remain stable to growing from these levels. Another major risk is that an appreciating dollar could reduce the value of earnings.

But, overall, future growth at Accenture is a safe bet.

WHY TO BUY
ACCENTURE (NYSE: ACN, $38.98)

• Strong client relationships and long-term contracts ensure smooth revenue growth

• Growing international presence