Accenture axes 19,000 jobs worldwide

One of the largest layoff rounds in a consultancy sector facing significant economic headwinds, Accenture Plc soared after announcing plans to cut 19,000 jobs, or about 2.5% of its workforce, over the next 18 months.

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Following the announcement, shares increased by as much as 8.4% in New York, which was the largest intraday gain since December 2021. In addition to spending an additional $300 million on office space consolidation, the business said it expects to spend $1.2 billion on employee severance and other personnel-related costs. Moreover, it reduced its revenue growth projections from an earlier range of 8% to 11%, to between 8% and 10% this fiscal year.

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The action is the latest indication of how the economy affects consulting, technology, and finance organizations. This has caused several companies to slash employees and freeze hiring. Following a significant increase in personnel over the previous ten years, McKinsey & Co. stated last month that it would eliminate 2,000 positions. Meanwhile, KPMG disclosed that it had eliminated over 700 employees from its US consulting business due to waning demand. Others, like EY, are drastically reducing their hiring goals.

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The companies couldn't pass up consultancy opportunities because of the widespread pandemic. Thus the hiring spree, according to Tom Rodenhauser, managing partner of Kennedy Research Reports. "We are now observing a correction. In the upcoming months, we'll see more businesses taking similar actions.

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The job cuts announced by Accenture's competitors are small in comparison to Accenture's. Those working in non-billable corporate operations including the legal, financial, and human resources departments will be impacted by more than half of the job cuts. The decision was made only 16 months after Accenture promised to create 3,000 digital jobs in the UK over a three-year period. Half of those jobs are located outside London. This commitment, according to a corporate spokeswoman, is still valid.

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Rodenhauser says the extent of the workforce cut underscores Accenture's intimate ties to the faltering tech sector.

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"It makes sense that the biggest supplier will suffer more when the sector slows," he added, noting that Accenture holds a strong position as a provider in that industry.

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The company is "taking actions to minimize our costs in the fiscal year 2024 and beyond while continuing to invest in our business and our people," according to Accenture Chief Executive Officer Julie Sweet.

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In addition, the company reported that bookings increased 13% from last year to a record $22.1 billion in the second quarter, exceeding projections. Managed services accounted for more than half of all pending reservations, with consulting making up the remainder. Also up 5% to $15.8 billion were revenues.