Tech layoffs continue: Accenture to axe 19,000 employees
Irish IT services firm Accenture has announced its plans to cut 19,000 jobs. This would be one of the biggest rounds of tech layoffs in the past few months. The company also trimmed its third-quarter revenue forecast to $16.1-16.7 billion. IT services firms have been struggling because of the decrease in spending by enterprises due to recession fears.
Why does this story matter?
The uncertainties that engulfed the global economy refuse to go away. With recession fears looming large, companies have cut their spending to stay afloat when the recession hits. This has resulted in IT service companies scrambling for business. The economic outlook still remains glum, making more layoffs an immediate possibility. Indian IT services companies, including Wipro and Infosys, have also fired staffers.
The layoffs will primarily affect staff at non-billable corporate functions
Accenture's decision to fire employees will affect about 2.5% of its workforce. The layoffs will primarily affect staff at the company's non-billable corporate functions, with half of them staring at termination. The firm expects its revenue to grow by 8-10% compared to previous estimates of 8-11%. Accenture's shares went up after the announcement of job cuts.
The layoffs are to support strategic growth priorities: Accenture
"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," Accenture said in a statement.
Recession-wary enterprises to slash technology budgets
Accenture has decided to cut revenue and profit projections due to the current economic outlook. It expects recession-wary enterprises to cut technology budgets in the coming weeks. The company expects its earnings per share to be between $10.84 to $11.06 compared to $11.20 to $11.52 previously. Accenture also declared a quarterly cash dividend of $1.12 per share.
The company has set aside $1.2 billion for severance pay
Accenture is expected to complete its streamlining process in the next 18 months. The company said it has set aside $1.2 billion for severance pay. "We are also taking steps to lower our costs in the fiscal year 2024 and beyond while continuing to invest in our business and our people to capture the significant growth opportunities ahead," said Julie Sweet, CEO of Accenture.
