Accenture Slashes 19,000 Jobs in Major Cost-Cutting Initiative

Accenture Slashes 19,000 Jobs in Major Cost-Cutting Initiative

Table of Content

In this article, we will explore the factors that led to Accenture’s choice to cut 19,000 positions across the globe within the next year and a half in an attempt to save money.

Key Takeaways:

  • In the next year and a half, Accenture intends to reduce its workforce by 2.5%, which amounts to approximately 19,000 jobs being cut.
  • The company expects to incur $1.5 billion in costs related to the downsizing, including $1.2 billion for severance and $300 million for office consolidation.
  • Around 50% of the employment cuts will occur in positions that are not billable, including support and administrative duties.
  • Accenture hired around 100,000 employees in its 2022 fiscal year.
  • The company cites economic and geopolitical uncertainty as factors impacting its business.

Major Workforce Reduction in the Works

Global tech consulting firm Accenture revealed plans to eliminate approximately 19,000 jobs, or 2.5% of its workforce, over the next 18 months. 

This downsizing effort is part of the company’s strategy to cut costs and streamline operations amidst ongoing economic challenges.

Financial Impact of the Downsizing

Accenture anticipates incurring $1.5 billion in costs as a result of this restructuring, with $1.2 billion directly related to severance packages for the affected employees. 

In addition, the company expects to spend $300 million on consolidating office spaces to further reduce costs.

Focus on Non-Billable Roles

Approximately half of the job losses will come from non-billable roles, such as administrative and support functions, as opposed to customer-facing roles. 

Accenture continues to hire new talent to support its strategic growth priorities while simultaneously streamlining its operations.

Economic and Geopolitical Factors

The company cites significant economic and geopolitical uncertainty in many markets worldwide as factors impacting its business, particularly concerning wage inflation and foreign currency exchange rate volatility.

Revenue and Profit Projections Adjusted

Despite reporting $15.8 billion in revenue for its latest quarter, a 5% year-on-year increase, and an operating profit of $1.946 billion, Accenture has lowered its forecasts for the remainder of its financial year. 

The company now expects revenue growth between 8 and 10%, down from the previous projection of 8 to 11%, and an operating margin range of 14.1-14.7%, as opposed to the earlier estimate of 15.3-15.5%. 

This cautious outlook is driving the company’s decision to reduce its workforce and cut costs.

Workforce Growth During the Pandemic

Accenture has experienced significant workforce growth during the pandemic, increasing its staff numbers by 30% since June 2021 and adding around 170,000 employees. 

This growth, however, has not shielded the company from the need to cut costs in the face of uncertain economic conditions.

Tech Industry Job Reduction Trend

Accenture’s decision to reduce its workforce mirrors similar moves by other tech giants like Meta, Amazon, Google, and Microsoft, which have also announced significant job cuts. 

So far this year, 513 tech companies have made 150,000 employees redundant. Some experts argue that this trend is driven more by copycat behavior than genuine recession fears.

Conclusion

Accenture’s announcement of cutting 19,000 jobs highlights the challenges faced by tech companies in an uncertain economic landscape. 

As the industry continues to evolve, it remains to be seen how these workforce reductions will impact the long-term growth and success of these organizations.

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Written by

Alexander Sterling

Alexander Sterling

Alexander Sterling is a renowned financial writer with over 10 years in the finance sector. With a strong economics background, he simplifies complex financial topics for a wide audience. Alexander contributes to top financial platforms and is working on his first book to promote financial independence.

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Judith

Judith

Judith Harvey is a seasoned finance editor with over two decades of experience in the financial journalism industry. Her analytical skills and keen insight into market trends quickly made her a sought-after expert in financial reporting.