Accenture cuts 19,000 jobs, trims forecasts on worries of lower IT spending

Accenture said more than half of the 19,000 jobs to be cut will be in its non-billable corporate functions. PHOTO: REUTERS

DUBLIN - Accenture lowered its annual revenue and profit forecasts and said on Thursday it would cut about 2.5 per cent of the workforce, the latest sign that the worsening global economic outlook was sapping corporate spending on IT services.

More than half of the 19,000 jobs to be cut will be in its non-billable corporate functions, the company said, sending its shares up more than 4 per cent before the bell.

Since late last year, the tech sector has laid off hundreds of thousands of employees due to a demand downturn caused by high inflation and rising interest rates. 

Rival Cognizant Technology Solutions last month pointed to “muted” growth in bookings, or the deals IT services firms have in the pipeline, in 2022 and forecast quarterly revenue below expectations. 

IBM and India’s top IT services firm Tata Consultancy Services have also flagged weakness in Europe, where the Ukraine war has affected client spending.

Accenture now expects annual revenue growth to be between 8 per cent and 10 per cent compared to the previous projection of 8 per cent to 11 per cent increase.

Earnings per share is expected in the range of US$10.84 (S$14.40) to US$11.06, compared with US$11.20 to US$11.52 previously.

“Companies remain focused on executing compressed transformations,” Accenture chief executive Julie Sweet said in a post-earnings call, referring to how businesses were trying to become leaner in the turbulent economy.

A survey of more than 1,000 IT decision makers by US-based Enterprise Technology Research said they plan to reduce their 2023 budget growth.

The growth expectations are now 3.4 per cent, down from 5.6 per cent increase captured in October 2022. 

“Our forward-looking technology spending intentions data for both sectors (IT consulting and outsourced IT) are approaching zero,” said Mr Erik Bradley, chief engagement strategist at the technology market research firm. “In short, the data indicates a very difficult environment ahead for consulting firms.” REUTERS

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