Accenture Faces 19,000 Layoffs amid Tech Turmoil

The IT consultancy giant cited 'ongoing volatility and uncertainty in the macro environment' in a call

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Published: March 27, 2023

Demond Cureton

Accenture has slashed 19,000 positions, or 2.5 percent of its entire workforce, in the latest wave of layoffs, it revealed last Thursday. The Dublin-based IT consultancy giant is the latest affected by the current economic crisis.

Jobs affected across Accenture will hit non-billable corporate functions, it said in recent statement. News of the job cuts boosted share prices for the firm 6.4 percent at the same time.

The news comes amid a massive wave of layoffs across the tech industry, with Meta Platforms, Microsoft, Google parent Alphabet, Amazon, and many others launching a second round of job cuts.

Market forces triggering the mass layoffs include US Federal Reserve rate hikes, economic instability due to the ongoing Silicon Valley Bank collapse, and runaway inflation. Reports have also cited lower demand for services and turmoil from the ongoing Russian-Ukrainian war.

Accenture expects its annual revenue growth rate to remain from 8 percent to 10 percent compared to its initial 8 percent to 11 percent estimate, news reports revealed. Additionally, Accenture’s earnings per share is estimated to reach from $10.84 to $11.06, down from a range of $11.20 to $11.52 from earlier.

The firm will also accumulate around $1.2 billion USD to provide severance packages up to 2024.

CEO Addresses Layoffs in Q2 Call

In a post-earnings call, Julie Sweet, Chief Executive, Accenture addressed the layoffs in a follow-up call,

“We believe that the ongoing volatility and uncertainty in the macro environment is making it even clearer to clients that they need to change more, not less. And that two of the five key forces of change that we have identified for the next decade, the need for total enterprise reinvention and the ability to access, create and unlock the potential of talent are critical to succeed in the near, medium and long-term”

Continuing, she said that Accenture noted “two common themes.” Sweet stated that cloud computing, data, artificial intelligence (AI), and security continued to lead company strategies.

She added that companies remained “focused on executing compressed transformations” to lower costs, strengthen growth, and remain more agile and resilient.

The developments come after an Enterprise Technology Research survey of over 1,000 IT executives.

Findings in the report revealed that most respondents would reduce their 2023 budget growth. Current estimates stand at 3.4 percent, a drop from 5.6 percent in October last year.

Erik Bradley, ETR’s Chief Engagement Strategist, said: “In short, the data indicates a very difficult environment ahead for consulting firms.”

The news comes after Accenture invested heavily in its Metaverse Continuum Group last year. The initiative aims to consult and lead the development of the future spatial communications platform.

Accenture’s project aimed to create a framework for metaverse development among global firms, leading to their digital transformations. The company was arguably the first to mass adopt Meta’s Quest 2 headsets after purchasing 60,000 units to onboard new hires in 2021.

The consultancy firm also launched extended reality (XR) projects in Singapore’s Changi Airport in a strategic partnership in August last year. Additionally, it has backed women’s empowerment movements in India to boost the number of female XR executives in the subcontinent’s economy.

Tech Giants, Giant Problems

Accenture’s layoffs come amid the economic crisis, which has hit multiple tech giants globally, with Meta laying off a further 10,000 employees in March due to slowing economic growth and overhead costs, among others.

Meta also launched mass redundancies totalling 11,000 in November last year. Mark Zuckerberg, Meta’s Chief Executive, stated recently that his company would work on “transformative” technologies such as AI.

He said at the time: “Our leading work building the metaverse and shaping the next generation of computing platforms also remains central to defining the future of social connection. And our apps are growing and continuing to connect almost half of the world’s population in new ways. This work is incredibly important and the stakes are high. The financial plan we’ve set out puts us in position to deliver it.”

Microsoft also laid off 11,000 workers across its operations, leading to the subsequent shuttering of its AltspaceVR metaverse platform. Despite this, Microsoft will continue to develop its mixed reality toolkit (MRTK) after the layoff cycle, along with its HoloLens 2 and other MR headsets.

The Redmond, Washington-based firm also cut back staff developing the US Army’s Integrated Visual Augmentation System (IVAS). The groundbreaking device aims to enhance battle readiness for soldiers with heads-up displays (HUDs), sight lining, peer-to-peer communications, and waypoint guidance, among others.

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