Accenture has confirmed plans to reduce its workforce by 19,000 employees, which accounts for 2.5% of its total staff, over the next 18 months. This announcement comes amid a series of reductions in the finance and fintech industries, driven by a decline in IT spending.
The decision reflects a broader trend stemming from significant cutbacks in IT budgets and digital transformation initiatives. Reports from Reuters highlight that companies like Cognizant, IBM, and Tata Consultancy Services are also experiencing slowed growth in IT contracts.
Accenture’s revised annual revenue growth forecast is now set between 8% and 10%, a decrease from its earlier estimate of 8% to 11%. In a filing with the Securities and Exchange Commission (SEC), the company indicated that during the second quarter of fiscal 2023, it began implementing measures to streamline operations, transform non-billable corporate functions, and consolidate office spaces in an effort to cut costs.
These initiatives are expected to result in approximately $1.2 billion in employee severance and related personnel expenses. Over half of the job cuts will affect employees in corporate roles, and Accenture anticipates incurring an additional $300 million in costs linked to office space consolidation.
The company expects to record total business optimization expenses of around $1.5 billion, consisting of approximately $800 million in fiscal 2023 and $700 million in fiscal 2024. The actual timing and amount of these costs will depend on local consultation processes and regulations.
CEO Julie Sweet described the cuts as “offensive” rather than defensive, aimed at maintaining long-term profitability in an environment of high inflation. She noted the ongoing challenges posed by rising wage inflation, which the company is addressing through pricing strategies, cost efficiencies, digitization, and identifying opportunities for structural cost reduction.
This decision aligns with recent workforce reductions in the industry, such as Truelayer’s decision to lay off 10% of its staff and BNPL provider Affirm’s announcement of a 19% workforce reduction.