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Accenture Lowers Expectations And Will Eliminate 19,000 Employees As IT Investment Slows

Accenture Lowers Expectations And Will Eliminate 19,000 Employees As IT Investment Slows
Accenture Plc, the latest indication that the deteriorating global economic picture was sapping corporate spending on IT services, decreased its annual revenue and profit estimates and made the decision to eliminate around 2.5% of its staff, or 19,000 jobs.
Accenture announced on Thursday that more than half of the positions to be eliminated will be in non-billable corporate tasks, which helped boost its stock by 6.4%.
Due to a decline in demand brought on by high inflation and rising interest rates, the tech sector has been forced to lay off hundreds of thousands of workers since late last year.
Competitor Cognizant Technology Solutions forecasted quarterly revenue below forecasts and referred last month to "muted" increase in bookings, or the agreements IT services businesses have in the works.
A slowdown in Europe, where the Ukraine war has hurt client spending, has also been noted by IBM Corp. and Tata Consultancy Services, India's biggest IT services provider.
In contrast to its prior prediction of an increase of 8% to 11%, Accenture now anticipates yearly revenue growth to be between 8% and 10%.
As opposed to the previous range of $11.20 to $11.52, the estimated earnings per share are in the range of $10.84 to $11.06. Through fiscal 2023 and 2024, the business anticipates severance expenditures to total $1.2 billion.
"Companies remain focused on executing compressed transformations," Chief Executive Julie Sweet said in a post-earnings call referring to how businesses were trying to become leaner in the turbulent economy.
According to a US-based Enterprise Technology Research poll of more than 1,000 IT decision makers, they intend to slow the growth of their budgets by 2023. Now, 3.4% growth is expected, down from a 5.6% gain recorded in October 2022.
"In short, the data indicates a very difficult environment ahead for consulting firms," said Erik Bradley, chief engagement strategist at the technology market research firm.

Christopher J. Mitchell

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