Accenture is laying off 19,000 employees from their current workforce. Accenture, one of the largest tech consultancy firms in the world, has announced plans to cut 19,000 jobs or 2.5% of its workforce in the next 18 months. The move is in response to dwindling global economic conditions, which have forced many businesses to cut expenses.
The reduction in jobs, more than half of which will affect individuals in non-billable corporate functions, comes after the company had increased its workforce by 38,000 in the financial year that ended February 2023 to serve the increased demand for its services and solutions.
The Dublin-based firm has also lowered its annual revenue and profit forecasts for the fiscal year 2023. It now expects annual revenue growth to be between 8% to 10%, down from 8% to 11%.
The company cited economic conditions, including macroeconomic conditions, the overall inflationary environment, and levels of business confidence as affecting its results of operations. There continues to be significant economic and geopolitical uncertainty in many markets around the world, which has impacted and may continue to impact its business.
The move by Accenture comes amid a trend in the tech sector of laying off hundreds of thousands of employees due to a demand downturn caused by high inflation and rising interest rates. Other tech giants, such as IBM Corp and India’s top IT services firm Tata Consultancy Services, have also flagged weakness in Europe, where the Ukraine war has affected client spending.
A survey by US-based Enterprise Technology Research revealed that more than 1,000 IT decision-makers plan to reduce their 2023 budget growth. The growth expectations are now 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.
In response to the challenging environment, Accenture CEO Julie Sweet stated that companies remain focused on executing compressed transformations.
This refers to how businesses are trying to become leaner in the turbulent economy. Accenture expects to incur $1.2 billion in severance costs through fiscal 2023 and 2024. Earnings per share are expected in the range of $10.84 to $11.06 compared with $11.20 to $11.52 previously.
In conclusion, the announcement by Accenture to cut jobs and lower its revenue and profit forecasts underscores the difficult economic conditions currently being experienced in many markets around the world. The move is in response to a trend in the tech sector of laying off employees due to a demand downturn caused by high inflation and rising interest rates.
The recent announcement from Accenture regarding its job cuts is another reminder of the difficult environment that consulting firms face amidst ongoing economic uncertainty. With reduced growth expectations and muted demand for IT services, many companies are struggling to maintain their profitability and balance their workforce with client demand.