Accenture To Layoff 19000 Individuals, Impacting 40 Percent Of The Indian Workforce

Software services giant Accenture has stated recently that they would go through a laying-off process. The layoff would impact around 19000 jobs. They have cited difficult macroeconomic conditions and uncertainty, and even lowered their annual revenue and profit projections.

Accenture has stated the major reason behind the restructuring process is the currency headwinds and inflation of wages.

India comprises 40 percent of the total headcount of the company, accounting for 7.38 lakh employees. It has not been made evident how the current round of layoffs will impact jobs in India.

An Accenture spokesperson has addressed the situation and stated that the people’s impact has been estimated to be 2.5 percent of their current global workforce. The valuation may differ by the market and the country because of the results of different growth and footprints globally. It should not be considered as a figure applicable to all the locations.

The company has recorded an increase in the total headcount by 424 compared to the total headcount of 13000 in the last three years. The company has even predicted the revenue of the third quarter to be lower than expected. It has signalled it would have to reduce costs and stated that they expect lighter bookings in May compared to other months.

Accenture’s earnings could act as a preview of how broader the IT sector, especially the Indian software services, would perform in the next quarter. TCS will report its earnings in April, followed by Infosys and HCLTech on April 13 and April 20, respectively.

The company has expected the annual revenue growth to be around 8 to 10 percent in their local currency compared to 8 to 11 percent expected before the inflation.

During the second quarter, Accenture announced actions to streamline the operation sector, transform the non-billable corporate functions and reduce office space to trim costs.

The Chairman and CEO of Accenture, Julie Sweet, has stated that the business optimization procedure should be considered as an initiative to deliver shareholder value.

Accenture’s decision to undergo layoffs comes after massive layoffs in prominent companies like Meta, Amazon, and Microsoft that have announced multiple layoffs.

Amazon CEO Andy Jassy stated in a blog post that the tech giant would go through another round of layoffs. In the coming weeks, 9000 jobs will be eliminated. He has even stated that the latest layoffs will affect employees from Amazon Web Services (AWS), Amazon People eXperience and Technology Advertising, and Twitch, a gaming streaming platform.

The news sources have reported IT hiring has slowed down since December because of macroeconomic conditions due to increased inflationary pressures.

Julie Sweet has talked about the layoffs stating that the company has been facing difficult situations in tackling the inflation of wages. They have been doing the same with pricing, efficiently optimizing the costs and digitizing. They have identified an opportunity that would allow them to target more structural costs to create resilience in the P&L sector.

The Chief Financial Officer has stated that the layoffs would target around 2.5 percent or roughly 19000 individuals of the present workforce. In addition, the layoffs will be conducted in FY23.

The company has estimated 1.2 billion USD for severance and 300 million USD for consolidation of the office space. It has been expected that 800 million USD of these costs to be incurred by FY23 and another 700 million USD by the end of FY24.

She has furthermore stated that the company does not intend to increase headcounts by Q3. But, they expect the demand for software services will increase during June-August.

Accenture’s earning report:

For the second quarter that ended in February, the consulting firm reported adjusted earnings per share of $2.69. Revenue was $15.81 billion, up 9% in local currency the last year.

New contract bookings were a record $22.1 billion for the quarter, with consulting bookings of $10.7 billion and managed services bookings of $11.4 billion. Smaller deals, particularly in North America and the consulting sector, were under pressure. They added that communications and media spending in North America is also under pressure.

The Chief Financial Officer has remarked that the sales will be solid for the third quarter. She has added that despite facing enormous pressure in North America, the company has showcased good growth in Europe and other markets. When asked about the banking crisis, she added that Accenture does not have a big exposure to the small regional banks that were impacted by the collapse of SVB.

edited and proofread by nikita sharma