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Accenture layoffs: IT services firm Accenture Plc has announced that it will cut around 2.5% of its workforce, or 19,000 jobs, with more than half of the layoffs affecting staff in non-billable corporate functions. The company has revised down its annual revenue and profit forecasts due to the worsening global economic outlook that is causing a decline in corporate spending on IT services. The news sent Accenture’s shares up more than 4% before the bell.
To cut expenses, Accenture has taken steps to simplify its operations, restructure non-billable corporate activities, and combine its office locations. During the earnings call, KC McClure, who serves as Accenture’s Chief Financial Officer, informed analysts that these measures would affect around 19,000 or 2.5% of the company’s present staff, including more than 800 executives working across markets and services.
Around 19,000 individuals will leave by the conclusion of the fiscal year 2023, which accounts for nearly half of the 19,000 individuals. During the second quarter, Accenture incurred business optimization costs amounting to $244 million, and it anticipates incurring total expenses of about $1.5 billion by fiscal 2024.
The company estimates $1.2 billion for severance and $300 million for consolidation of office space, with approximately $800 million expected in fiscal 2023 and $700 million in fiscal 2024.
The company has revised its annual revenue growth forecast to be in the range of 8% to 10%, which is lower than its previous projection of an 8% to 11% rise. Furthermore, the company predicts that its third-quarter revenue will be below the expectations of Wall Street analysts. This is because of concerns that companies, who are being cautious due to the recession, will reduce their budgets, resulting in a negative impact on the company’s business.
Accenture predicted that its revenue for the current quarter would range between $16.1 billion and $16.7 billion. According to Refinitiv data, analysts had estimated an average revenue of $16.64 billion. Cognizant Technology Solutions, Accenture’s competitor, also indicated that there would be restrained growth in bookings, which are the agreements that IT service firms have in their pipeline for 2022. Cognizant’s first-quarter revenue projection was below market expectations.
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