Accenture stated that more than half of the cuts will hit its non-billable corporate services, pushing its shares up more than 4% before the opening bell.
Accenture Plc dropped its annual revenue and profit estimates and announced a personnel reduction of around 2,5%, or 19,000 positions, on Thursday. This is the latest indication that the deteriorating global economic outlook is reducing corporate expenditure on IT services.
More than half of the layoffs would affect employees in the business’s non-billable corporate tasks, the company stated, causing its shares to rise by more than 4 percent before the opening bell.
Amazon will eliminate 9,000 more workers in a fresh wave of layoffs.
Accenture now anticipates annual revenue growth between 8% and 10%, as opposed to the previous estimate of 8% to 11%.
Cognizant Technology Solutions, a competitor, alluded to “muted” growth in bookings, or the agreements IT services businesses have in the pipeline, in 2022 after its revenue projection for the first quarter fell short of market expectations.
Accenture stated that it now anticipates profits per share in the range of $10.84 to $11.06, down from $11.20 to $11.56 before.
“Companies remain focused on implementing compressed changes,” CEO Julie Sweet said on a post-earnings call, alluding to firms’ efforts to become leaner amid a volatile economy.
A poll of more than 1,000 IT decision-makers conducted by Enterprise Technology Research in the United States revealed that they want to minimize their budget growth in 2023. The projected growth rate has decreased to 3.4% from 5.6% in October 2022.
Our forward-looking statistics on technology investment plans for both IT Consultancy and Outsourced IT are approaching zero! stated the technology market research firm’s principal engagement strategist, Erik Bradley.
In conclusion, “the facts predict a very challenging future for consulting businesses.”