It is not yet clear how many of those job losses will impact Accenture’s insurance arm, and more details are due to be released on which of the company’s services will be mainly affected.
Accenture is a leading global professional services company that helps the world’s leading businesses, governments and other organisations build their digital core, optimise their operations, accelerate revenue growth and enhance citizen services. It provides management consultancy, banking and insurance services across a huge portfolio of global customers.
According to reports, Accenture has announced that it intends to spend $1.2 billion on severance and $300 million on consolidating office space, with more than half of the affected positions being back-office roles.
In an official statement released by Accenture, the corporation said: “While we continue to hire, especially to support our strategic growth priorities, during the second quarter of fiscal 2023, we initiated actions to streamline our operations and transform our non-billable corporate functions to reduce costs. Over the next 18 months, these actions are expected to result in the departure of approximately 19,000 people (or 2.5% of our current workforce), and we expect over half of these departures will consist of people in our non-billable corporate functions.”
Streamlining operations in wake of inflation
Although Accenture continues to hire, it is streamlining its operations and transforming its non-billable corporate functions to minimise expenses. The company has also downgraded its revenue growth outlook for the 2023 fiscal year to between 8% and 10%. Despite this, Accenture’s shares rose 3.9% to $263 in early trading after the announcement.
Speaking about the announcement, Chief Executive Officer Julie Sweet said Accenture “taking steps to lower our costs in fiscal year 2024 and beyond, while continuing to invest in our business and our people.”
In response to the news, Accenture’s shares climbed as much as 8.4% in New York. The company also said bookings rose to a record $22.1 billion in its second quarter, beating estimates, a 13% increase from the same period last year. Over half of total new bookings came from managed services, with consulting making up the rest. Revenues also rose 5% to $15.8 billion.
Furthermore, the consensus bookings were apparently “a surprise given the weak economic climate,” said Bloomberg Intelligence analysts.
Like Accenture, other consulting firms such as KPMG and McKinsey are also cutting costs by reducing their workforce. In recent months, many tech companies have also laid off workers due to higher interest rates, inflation, and recession fears leading to a reduction in advertising and consumer spending. Facebook-parent Meta has announced plans to cut 10,000 jobs, reducing its headcount by approximately 25%.
Reports suggest job cuts in the US across the technology industry in 2023 alone, has hit 121,205 so far
