Accenture To Sack 19,000 Employees To Streamline Operations, Reduce Costs

The IT services firm reduced its yearly sales and profit forecast due to concerns that recession-averse businesses will reduce their technology spending.

Accenture expects revenue for the third quarter of fiscal 2023 to be in the range of $16.1 billion to $16.7 billion.

IT services firm Accenture on Thursday said it would lay off about 2.5 per cent of its workforce, or 19,000 employees, becoming the latest major company to announce job cuts. Accenture announced the layoffs to streamline operations and transform corporate functions to reduce costs. 

The company in its SEC filing said, "During the second quarter of fiscal 2023, we initiated actions to streamline our operations and transform our non-billable corporate functions to reduce costs. Over the next 18 months, these actions are expected to result in the departure of approximately 19,000 people (or 2.5 per cent of our current workforce), and we expect over half of these departures will consist of people in our non-billable corporate functions."

Additionally, the IT services firm reduced its yearly sales and profit forecast due to concerns that recession-averse businesses will reduce their technology spending. In local currency, the company now anticipates annual sales growth to be in the range of 8 per cent to 10 per cent, up from the previously anticipated range of 8 per cent to 11 per cent. The company's revenue forecast for the third quarter was in the range of $16.1 billion and $16.7 billion.

"Accenture 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 percent to 7 percent in local currency, reflecting the company’s assumption of an approximately negative 3.5 percent foreign-exchange impact compared with the third quarter of fiscal 2022," it said in a statement.

For the second quarter, Accenture revenues of $15.8 billion, an increase of 5 per cent in US dollars and 9 per cent in local currency over the same period last year. New bookings for the quarter were a record $22.1 billion, with consulting bookings of $10.7 billion and managed services bookings of $11.4 billion.

Adding to this the company said for the second quarter of fiscal 2023, attrition, excluding involuntary terminations, was 12 per cent, down from 18 per cent in the second quarter of fiscal 2022. The company also adjusted compensation in order to attract and retain appropriate numbers of qualified employees.

The company said, "For the majority of our people, compensation increases become effective December 1 of each fiscal year. Given the overall inflationary environment, compensation has been and continues to increase faster than in prior years."

The layoff comes as major US tech firms have been cutting headcounts in order to cope with the current economic environment. Firms like Amazon, Meta, Twitter, Google, and Microsoft have laid off thousands of employees.