Accenture cuts 19,000 jobs on slowdown fears

Accenture cuts 19,000 jobs on slowdown fears

24 Mar    Finance News, News

Accenture has announced plans to cut 19,000 jobs, about 2.5 per cent of its workforce, as corporate clients grow increasingly cautious about the strength of the global economy.

The business, one of the world’s biggest consultancy groups, follows others in the sector in implementing sweeping layoffs after lowering its annual forecast of sales and profits.

McKinsey is cutting up to 2,000 jobs in its 45,000 workforce, while KPMG is shedding almost 700 posts in its US advisory business and about 200 in Australia — about 2 per cent of its total in each country.

Only 16 months ago Accenture pledged to create 3,000 tech jobs in the UK, half of them outside of London, over three years. A spokesman for Accenture said this commitment still stood.

The firm, which has 738,000 employees, embarked on a recruitment spree as it enjoyed robust demand for tech advice from large companies. In three years its workforce has grown by about 229,000 people.

Accenture estimates that the planned job reductions will cost a total of $1.5 billion this year and next. It is braced to spend $1.2 billion on severance payouts and $300 million on the “consolidation of office space”.

Accenture said: “While we continue to hire, especially to support our strategic growth priorities, during the second quarter of fiscal 2023, we initiated actions to streamline our operations and transform our non-billable corporate functions to reduce costs.”

The job cuts will take place over the next 18 months, it said, stressing that more than half of the employees who depart will be working in non-billable corporate roles.

Shares in Accenture rose strongly after the announcement and closed up 7.3 per cent, or $18.39, at $271.66 in New York last night, valuing the firm at $171.2 billion.

Julie Sweet, Accenture’s chief executive, said: “We are also taking steps to lower our costs in fiscal year 2024 and beyond, while continuing to invest in our business and our people to capture the significant growth opportunities ahead.”

Accenture, based in Dublin, started as the technology consulting arm of the accountancy firm Arthur Andersen in the 1950s. Today it has more than 9,000 clients across the world. The group listed in 2001 and has a market value of $190 billion.

The company has reduced its projected annual revenue growth to between 8 and 10 per cent, down from a previous forecast of up to 11 per cent. It has also downgraded its profit guidance.

It said that total revenue rose 5 per cent to $15.8 billion in the three months to February 28, its second quarter. Net income fell 7 per cent to $1.5 billion.

Sweet said: “Our strong financial results this quarter again demonstrate that our ability to bring together industry, functional and technology expertise as well as managed services, continues to differentiate us with our clients.”

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