Global professional services firm, Accenture, has announced that it will cut approximately 2.5% of its workforce, or 19,000 jobs, due to a lowered revenue and profit forecast. The company has attributed this decision to the global economic slowdown, which is having an impact on corporate spending on IT services. More than half of the jobs to be cut will reportedly be non-billable corporate functions.
In addition to the job cuts, Accenture has revised down its annual revenue growth projections from 8-11% to 8-10%. The company has also adjusted its estimated earnings per share from a range of $11.20-11.52 to $10.84-11.06. Accenture predicts severance costs of $1.2 billion over the next two fiscal years.
Accenture CEO, Julie Sweet, has acknowledged that the current economic climate means that “companies remain focused on executing compressed transformations,” referring to the ongoing trend towards companies trying to streamline their operations and reduce costs in order to navigate an uncertain and turbulent business environment.
This announcement from Accenture comes amid a wave of layoffs in the tech sector, with companies struggling amid a demand downturn caused by high inflation and rising interest rates. Rival firm Cognizant Technology Solutions has flagged “muted” growth in bookings for 2022, and a revenue forecast for the quarter that fell below expectations. IBM Corp and India’s top IT services firm Tata Consultancy Services have also reported weak growth in Europe as a result of the Ukraine crisis impacting on client spending.
The current economic climate signifies a challenging period ahead for consulting firms, with a recent survey by US-based Enterprise Technology Research indicating a significant downturn in expected IT budgets. Despite this, Accenture shares rose by 6.4% in response to the news of the job cuts.
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