Accenture Cuts Workforce and Lowers Forecasts Due to Worsening Global Economic Outlook
Accenture Plc has announced its decision to cut approximately 2.5% of its workforce, or 19,000 jobs, as well as lowered its annual revenue and profit forecasts. This move comes as a result of the worsening global economic outlook, which has been impacting corporate spending on IT services.
Accenture stated that more than half of the job cuts will be in its non-billable corporate functions. Despite this announcement, Accenture’s shares rose 6.4% on Thursday.
The tech sector has been struggling since late last year, leading to hundreds of thousands of employees being laid off due to a demand downturn caused by high inflation and rising interest rates.
Rival firm Cognizant Technology Solutions recently pointed to “muted” growth in bookings for 2022 and forecasted quarterly revenue below expectations. Other companies, including IBM Corp and Tata Consultancy Services, have also highlighted weaknesses in Europe, where the Ukraine war has affected client spending.
Accenture now expects annual revenue growth to be between 8% and 10%, down from its previous projection of an 8% to 11% increase. The company also expects earnings per share to be in the range of $10.84 to $11.06, compared with $11.20 to $11.52 previously.
The company expects to incur $1.2 billion in severance costs through fiscal 2023 and 2024 due to the workforce cuts.
“Companies remain focused on executing compressed transformations,” said Chief Executive Julie Sweet in a post-earnings call, referring to how businesses were trying to become leaner in the turbulent economy.
A survey of more than 1,000 IT decision-makers by U.S.-based Enterprise Technology Research revealed that they plan to reduce their 2023 budget growth. Growth expectations are now at 3.4%, down from the 5.6% increase captured in October 2022.
“In short, the data indicates a very difficult environment ahead for consulting firms,” said Erik Bradley, Chief Engagement Strategist at the technology market research firm.
About Accenture:
Accenture plc, a Dublin-based professional services company that specializes in information technology services and consulting, is also an Irish-American corporation. In 2022, it reported revenues of $61.6 billion, making it a Fortune Global 500 company.
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