Accenture reduces 19,000 jobs due to slowdown fears

Accenture announced plans to reduce 19,000 jobs, or 2.5 percent of its workforce, in response to corporate clients growing increasingly concerned about the strength and stability of the global economy.

After lowering its annual sales forecast, the business, which is one of the largest consultancy groups in the world, implements sweeping layoffs.

McKinsey will be laying off up to 2,000 employees in its 45,000-strong workforce. KPMG will be shedding nearly 700 jobs in its US advisory business, and 200 in Australia — approximately 2% of its total in each country.

Accenture made a promise 16 months ago to create 3000 tech jobs in Britain, with half of these outside London. This was over a period of three years. Accenture’s spokesperson stated that this commitment is still in effect.

As it saw a strong demand from large corporations for tech advice, the firm of 738,000 employees embarked upon a recruitment spree. It has seen a growth of 229,000 people in three years.

Accenture projects that job cuts will result in a total cost of $1.5 billion next year and the following. Accenture expects to spend $1.2Billion on severance payments and $300M on “consolidation office space”.

Accenture stated that while we continue to hire, particularly to support our strategic growth goals, Accenture initiated actions during the second quarter fiscal 2023 to streamline operations and transform non-billable corporate functions in order to reduce costs.

It stated that the job cuts will occur over the next 18-months, and stressed that more than half the employees who leave will be in non-billable corporate positions.

Accenture shares rose strongly following the announcement. They closed up 7.3%, or $18.39 at $271.66 in New York last evening, valued at $171.2 million.

Accenture’s chief executive Julie Sweet stated that the company is taking steps to reduce costs in fiscal years 2024 and beyond. She also said that they are continuing to invest in their business and in their people in order to take advantage of the substantial growth opportunities.

Accenture is a Dublin-based company. It was founded in 1950s as the technology consulting arm for Arthur Andersen, an accountancy firm. It has over 9,000 clients around the globe today. The company was listed on the stock exchange in 2001. It has a market capitalization of $190 billion.

The company’s projected annual revenue growth has been lowered to between 8-10%, from an earlier forecast of as high as 11 percent. It also reduced its profit guidance.

According to the company, total revenue increased 5% to $15.8billion in the three months ending February 28th. This was its second quarter. Net income decreased 7 percent to $1.5 billion

Sweet stated: “Our strong financial results in this quarter again prove that our ability to combine industry, functional, and technology expertise, as well as managed service, continues to distinguish us from our clients.”