Reduced tech spending sees Accenture lay off 19,000 staff globally
When it comes to digital transformation, Accenture is no stranger to the industry. The global consulting company is known for enabling industries to adopt the right types of technology and transform their businesses to be more digitally savvy.
When the Covid-19 pandemic struck, Accenture was one of the few companies that were able to make the most of the situation by helping businesses in their tech journey. This includes providing consultancy on cloud services, AI adoption, cybersecurity, automation, and even the metaverse, with 249 partners in its ecosystem.
According to a report by The Financial Times, Accenture went on a hiring binge during the pandemic, adding more than 230,000 staff. Accenture currently has over 738,000 staff globally, with operations in over 200 cities across 49 countries and more than 9,000 clients served in 120 countries.
However, just as every other company that went on a hiring spree during the pandemic, Accenture is being affected by this. Accenture announced that it will lay off about 19,000 staff over the next 18 months. This is the largest job layoff in the consulting sector as businesses look to battle rising costs and economic uncertainties.
The Financial Times also reported that Accenture is expected to incur staff severance costs of US$1.2 billion and a further US$300 million of expenses from the “consolidation of office space.” The retrenchment will affect about 2.6% of Accenture’s staff. More than half of the cuts are expected to impact staff who work in corporate functions rather than serve clients directly.
While other consultancy companies have also announced job cuts, Accenture’s announcement comes as a rather surprising one given that the company reported a 5% increase in revenues at US$15.8 billion compared to the same period last year. Accenture also reported a drop in operations income and consulting revenues, but its managed services and outsourcing services grew.
Globally, layoffs are becoming increasingly common, especially in the tech industry. In fact, the tech industry itself has witnessed close to 122,000 employees being laid off. Most of the job cuts involved staff at big tech companies like Google, Meta and Amazon. The roles that were affected the most also included jobs that experienced a surge in hiring during the pandemic.
Meanwhile, for Accenture, the job cut could be due to a slowdown in tech investment from enterprises as well. Most companies did invest heavily in technology initially when the pandemic started. However, as more employees return to work in the office, companies are being more prudent in how they spend their funds, especially in tech.
Gartner reported that global IT spending contracted 0.2% in 2022 to US$4.38 trillion. This clearly indicates that businesses are taking a more cautious approach to how they spend on tech. Emerging technologies like the metaverse, for example, are no longer being hyped for most organizations, with funds being focused more on cybersecurity and AI instead.
The Gartner report also stated that while inflation continues to erode consumer purchasing power and drive device spending down, overall enterprise IT spending is expected to remain strong.
For now, Accenture will lay off 19,000 employees, and it may not be the last company to do so. At the end of the day, with economic uncertainties on the horizon, how companies spend on technology may have the final say on how many more layoffs will take place in 2023.
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