Accenture Plc, a world-renowned IT services company, has confirmed that they will be laying off 19,000 staff and reducing their expected revenue & profit due to the current economic situation and its unpredictability. The organization revealed that FY23 would see an approximation of 19,000 personnel out of the current workforce, being laid off equaling 2.5%. The company is currently undertaking a restructure which will mainly affect people in non-income generating roles. Revenue for this quarter is estimated to be between $16.1 billion and $16.7 billion.
The layoffs have been attributed to currency fluctuations and rising wages, resulting in an increase of 424 employees from the previous headcount of 13,000 over the past three years. With inflationary pressures taking their toll, it has become necessary for many organizations to cut costs and thus layoffs are becoming increasingly common. In such a situation, this company also had to take the same route and forecast lighter bookings for the month of May. Investments behemoths like Amazon, Meta & Microsoft have already resorted to multiple downsizing moves bringing this issue even more into focus.
India is at the top of the company’s employee list, making up 40% of its total workforce, which is around 7.38 lakh people. It is not yet known how many jobs in India will be affected by this recent round of layoffs. A spokesperson from Accenture has revealed that 2.5% of their global workforce may be affected due to the situation. Depending on the market, the numbers could vary since it’s based on different growth trajectories & footprints across countries.
Also Read: Surviving and Thriving in a Post-Layoff Job Hunt: Tips for Freshers and Experienced Alike
Julie Sweet, the Chairman and CEO of Accenture, believes that optimizing Accenture’s business should be a priority to maximize shareholder value. The CFO has confirmed that they are expecting to have strong sales during the third quarter. Although the company has endured heavy pressure in North America, they have managed to experience positive growth in Europe and other regions of the world.
For the quarter ending in February, the consulting firm reported adjusted earnings of $2.69 per share and total revenue was $15.81 billion, representing an increase of 9% compared to last year’s figures in local currency. During the quarter, record bookings totaled $22.1 billion with consulting booking at $10.7 billion and managed services bookings at $11.4 billion. Especially in North America and for consulting, smaller deals experienced difficulty. It was highlighted that expenditures related to communications & media in North America are experiencing some strain.
The CFO has expressed concerns about the recent layoffs, mentioning that inflation of wages and pricing were among the issues the company had to address. In order to stay financially viable, they took measures such as cost optimization and digitization. They have spotted an opening that will enable them to target more structural expenses for greater robustness in the Profit & Loss division.
Accenture’s financial results could provide an indication of the performance of the IT sector, particularly Indian software services companies, for the coming quarter. TCS will release their figures in April, followed by Infosys and HCLTech on April 13th and 20th respectively.
Ultimately, Accenture’s downsizing is a result of the current macroeconomic circumstances and escalating prices. They have set aside approximately $1.2 billion for severance payments & an additional $300 million for office consolidation. It’s anticipated that $800 million in costs will be incurred by the end of FY23, with an additional $700 million to be spent by the conclusion of FY24.
