Accenture PLC is cutting around 19,000 jobs over the next 18 months, or 2.5% of its workforce, as the professional services company looks to cut costs and streamline operations amid declining IT spending.
The company, which offers IT consulting and other business services, said in a filing filed Thursday that most of the employees expected to be affected will be in non-billable corporate roles. Accenture said it is still hiring to support “strategic growth priorities”.
The company said it expects its business optimization plan to cost about $1.5 billion, primarily from employee layoffs over the remainder of the current fiscal year and fiscal year 2024.
Accenture employs about 738,000 people worldwide and added 28,000 in the previous two quarters, chief financial officer KC McClure said in a conversation with analysts Thursday. The company would not comment on the cuts beyond what it provided in a 10-Q filing from the Securities and Exchange Commission.
Chief Executive Julie Sweet said the consulting firm had “seen an opportunity to go after more structural costs.” Accenture has also faced the challenge of “increasing wage inflation” through pricing, cost-efficiency and digitalization, she said.
Layoffs at the IT consulting firm are contributing to a wave of job losses in recent months as companies in technology, manufacturing and other sectors look to cut costs amid uncertainty over rising interest rates, continued inflation and other economic challenges.
Until recently, IT jobs were usually shielded from the massive layoffs at major tech companies like Amazon.com Inc.,
Alphabet Inc. and meta platforms Inc.
The job market for IT professionals contracted for the first time in more than two years in January, a sign that IT workers are facing the same scrutiny as workers in other roles and industries as companies spend less.
In particular, many of the IT functions that are being cut or automated are those in data center operations and telecommunications, said Victor Janulaitis, the CEO of consulting firm Janco Associates Inc., while a large skills gap remains in areas such as cybersecurity and software development.
“What we’re seeing is still high demand for IT skills,” said Ray Wang, founder and principal analyst at IT consulting firm Constellation Research Inc. “While Accenture manages its shareholders, there are a large number of companies with 20% to 30% attrition that are happy to pick up people from Accenture.”
Conscious technological solutions Corp.
, also a provider of IT consulting and outsourcing services, reported a slowdown in quarterly earnings growth in February. While revenue grew 9% in its communications, media and technology group, Cognizant Chief Financial Officer Jan Siegmund said in an earnings call that growth has slowed at its largest clients and that it follows changes in the technology sector.
McKinsey & Co. said last month it could cut as many as 2,000 jobs from its 45,000 employees.
The layoffs at Accenture come as global IT spending is expected to total $4.5 trillion by 2023, up 2.4% from last year but less than half the previous estimate by research. and IT consultancy Gartner Inc.
in October. Consulting firms like Accenture are often used by large companies for major IT upgrade projects, said Tim Crawford, CIO strategic advisor at Los Angeles-based IT consulting firm AVOA.
“As demand from corporate clients declines, so does Accenture’s staffing needs,” said Mr. Crawford. “This creates an indicator that large projects are generally scaled back, which we already saw starting six months ago.”
Faced with continued economic uncertainty, technology leaders have been looking for creative ways to work with smaller budgets than in previous years.
Capital One Financial Corp. in January laid off about 1,100 employees in the “agile” group within its technology division, which had focused on a software development methodology that uses faster and more flexible processes.
Accenture is also consolidating some of its office space, Ms. McClure said during the analyst call on Thursday.
Accenture’s news came after the company reported quarterly revenue of $15.8 billion on Thursday, up 5% from the same period last year.
The company also lowered its sales growth outlook for the year to between 8% and 10%, from an earlier estimate of between 8% and 11%. Ms. Sweet noted during Thursday’s call that the company has seen growth in its communications, media and technology group in Europe, especially compared to the slowdown in its North American customers.
Write to Belle Lin at email@example.com and Will Feuer at Will.Feuer@wsj.com
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