Accenture To Cut 19,000 Jobs Over Next 18 Months Even After Reporting Strong Revenues

Accenture has announced its plan to cut 19,000 jobs or 2.5% of its workforce over the next 18 months in one of the largest layoff rounds in the $62 billion IT giant's history.

In a Thursday filing, the Irish-American professional services company said it will spend $1.2 billion in severance and other personnel costs for the thousands of laid-off jobs over the next 1.5 years. It will invest another $300 million to consolidate its office space.

The Dublin-based company also noted that more than half of the laid-off positions will be from the back-office staff, Bloomberg News reported.

Accenture CEO Julie Sweet said the company is "taking steps to lower our costs in fiscal year 2024 and beyond, while continuing to invest in our business and our people," according to Fortune.

In a major boost, the tech giant generated $15.8 billion in sales, showcasing 5% growth year over year, as per its recent filing with the U.S. Securities and Exchange Commission. However, the company lowered its revenue growth outlook for the 2023 fiscal year to 8-10% from its previous estimate of 8-11%.

After its layoff announcement, Accenture shares rose 3.9% to hit $263 apiece in early trade.

A major reason behind Accenture's downsizing even after witnessing positive revenue growth is that the company undertook rapid hiring in 2022, according to CRN. The IT services and consultancy juggernaut reportedly hired thousands of people over the past 12 months to increase its workforce by 39,000 employees between February 2022 and February 2023. The company currently has 738,000 employees, while it only had 699,000 in February 2022.

In November 2021, Accenture pledged to create 3,000 tech jobs to boost its U.K. workforce over three years.

"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," the company added in the filing.

At the same time, Accenture acquired about two dozen companies from various countries across the world, including Japan-based Trancom ITS and Barcelona-based Alfa. More acquisitions added hundreds of new employees to the company's workforce. It also resulted in Accenture's record-breaking $22.1 billion in bookings in its latest second fiscal quarter.

"The year-over-year increase in our workforce reflects demand for our services and solutions, as well as people added in connection with acquisitions," the company said. "We hire to meet current and projected future demand."

Accenture's decision to lay off employees comes in the face of economic uncertainties affecting tech, consultancy and finance firms across the world. Last month, McKinsey & Co. said it planned on cutting 2,000 jobs in its non-consulting staff. KPMG also announced that it would axe 700 professionals from its U.S. advisory practice.

"Our results of operations are affected by economic conditions, including macroeconomic conditions, the overall inflationary environment and levels of business confidence. There continues to be significant economic and geopolitical uncertainty in many markets around the world, which has impacted and may continue to impact our business, particularly with regard to wage inflation and volatility in foreign currency exchange rates," Accenture noted in its filing.