IT major Accenture to lay off 19,000 employees

IT giant Accenture announced on Thursday that it would cut about 19,000 jobs, which represents 2.5 per cent of its workforce. The company announced that more than half of the layoffs would impact employees in its non-billable corporate functions.

"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," the company said in an SEC filing.

They added that they have set aside $1.2 billion for severance of the employees who will be let go.

"Accenture estimates $1.2 billion for severance and $300 million for consolidation of office space, with approximately $800 million expected in fiscal 2023 and $700 million in fiscal 2024," they noted.

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The IT major also lowered its annual revenue and profit projections. The IT company now expects its annual revenue growth to be in the range of 8 per cent to 10 per cent in local currency, compared to 8 per cent to 11 per cent expected previously. The company forecast current-quarter revenue in the range of $16.1 billion and $16.7 billion.

Furthermore, the company said that it expects earnings per share to be in the range of $10.84 to $11.06 compared to $11.20 to $11.52 previously. They also declared a quarterly cash dividend of $1.12 per share

New bookings for the quarter stood at $22.1 billion, consulting bookings at $10.7 billion, and managed services bookings at $11.4 billion.

Julie Sweet, chair and CEO of Accenture, said after the earnings call, “We are also taking steps to lower our costs in fiscal year 2024 and beyond while continuing to invest in our business and our people to capture the significant growth opportunities ahead.”

It is worth noting that Accenture's third-quarter forecast was below Wall Street estimates. Also, this development comes a day after the US Federal Reserve raised interest rates by 25 basis points.

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