Accenture cuts 19,000 jobs as IT spending slows

Accenture Corp lowered its annual revenue and profit forecasts and decided to cut about 2.5 percent of its workforce, or 19,000 jobs, in the latest sign that the outlook for the global economy is weakening, which has reduced the company’s IT services.

More than half of the jobs to be cut will be in its non-billable business operations, Accenture said on Thursday, sending its shares up 6.4 percent.

Since the end of last year, the technology sector has laid off hundreds of thousands of workers due to a downturn in demand caused by high inflation and rising interest rates.

Rival Cognizant Technology Solutions last month pointed to “quiet” growth in bookings, or deals in the pipeline for IT services firms, in 2022 and forecast quarterly revenue below expectations.

IBM Corp and India’s leading IT services company Tata Consultancy Services have also reported weakness in Europe, where the war in Ukraine has affected customer spending.

Accenture now expects annual revenue growth of 8-10 percent, compared to its previous forecast of 8-11 percent.

Earnings per share are expected to be between $10.84 and $11.06, compared with $11.20 to $11.52 previously. The company expects to pay $1.2 billion in severance costs during 2023 and 2024.

“Companies remain focused on implementing packaged changes,” CEO Julie Sweet said on a post-earnings call, referring to how companies tried to lighten up in a turbulent economy.

A survey of more than 1,000 IT decision-makers by the US-based Enterprise Technology Research found that they plan to reduce their 2023 budget growth. Growth expectations are now 3.4%, while it was 5.6% in October 2022.

“In short, the data points to a very difficult environment for consulting firms,” said Erik Bradley, engagement strategist at the technology market research firm.

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