Accenture to lay off about 19,000 employees in the coming months

Accenture, the global professional services firm, has announced that it will cut about 2.5% of its workforce, about 19,000 jobs, in the next few months. It might just be the biggest layoff among the tech consultancy firms.

This decision is due to the global economic downturn and the battle against the rising costs that have hit the IT industry. The company had expected to incur staff severance costs of $1.2bn and a further $300mn of expenses from the “consolidation of office space”.  However, with a dip in its share prices, the company might be taking preventive measures that might affect its performance this year.

According to a report by Financial Times, Accenture disclosed the layoffs along with its results for the three months ending in February when it reported revenues of $15.8 billion, an increase of 5% over the same time last year.

The group’s consulting revenues decreased by 1% to $8.3 billion, while sales by the managed services, or outsourcing, segment, increased by 12% to $7.5 billion. Operating income also decreased by 5.8% during the period, falling to $1.9 billion.

The reasons behind the shortfall in revenue are not clear from the statement. However, Accenture has noted that it is seeing strong demand for its services, particularly in the digital and cloud segments. The company has also been investing heavily in these areas, as well as in automation and artificial intelligence.

It is also on a mission to increase its revenue amidst the economic outlook. It expects revenues for the third quarter of fiscal 2023 to be in the range of $16.1 billion to $16.7 billion, an increase of 3% to 7% in local currency, reflecting the company’s assumption of an approximately negative 3.5% foreign-exchange impact compared with the third quarter of fiscal 2022.

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Layoff spree in the tech consultancy industry

Accenture is the latest to cut down their workforce but not the only consultancy firm. Last month, McKinsey laid off 2,000 employees, a decision that was heavy news for the industry.

KPMG also announced last month that it was eliminating almost 700 jobs in its US advisory business and about 200 in Australia — about 2 per cent of its total workforce in each country. It is the first company out of the big 4 to participate in the layoff spree game.

Early this month, ThoughtWorks confirmed it would be laying off around 500 employees globally, joining the ongoing list of IT companies cutting hundreds or thousands of employees in 2023.

Accenture’s future plans

Despite the lower-than-expected revenue, Accenture’s overall performance in recent years has been impressive. The company has consistently outperformed its peers in the professional services sector and has been on a growth trajectory.

The current setback in revenue is not expected to impact Accenture’s long-term growth prospects significantly. The company is well-positioned in the fast-growing digital and cloud services markets, expected to see strong demand in the coming years. Accenture has also been expanding its operations in emerging markets, which could provide further growth opportunities.