Accenture, the top software services provider on Thursday said that around 19000 job cuts are planned considering the macroeconomic concerns and uncertainty. They have also lowered the annual projections of revenue as well as profit.
The lay off is said to have been decided due to the currency headwinds and wage inflation.
Accenture has 7.38 number of employees out of which around 40% are in India.
It is still a matter of question about the impact of this current round of layoffs on the Indian job
Market.
According to Accenture’s spokesperson the stated figure is not applicable to all the geographies. The people’s impact is approximately 2.5 percent of the global workforce and it may differ depending on the market and country.
Over the past three quarters there was a global headcount addition of an average of 13000 whereas, there was a negligible number of 424 people this quarter.
Even the company has lowered its estimation for revenue and budget cuts from business and also lower order bookings in the March-May quarter.
Seeing the Accenture earnings one can predict that the broader picture of the IT sector related to Indian software services firms will have a decent amount of earnings from the second week of April.
TCS will report their earnings on April 12, Infosys will report it on April 13 and HCLTech on April 20.
The company’s current expectation of growth has fallen from 8% -11% to 8%-10% in local currency.
Accenture in the second quarter has reduced their costs by taking actions streamlining the operations, transforming non-billable corporate functions and consolidation of office spaces.
Julie Sweet, chair and CEO, Accenture had said that the business optimisation initiatives are taken to provide a considerable value to their shareholders.
Accenture’s massive reduction in headcount is followed by the huge layoffs by the big tech companies in North America like Amazon, Microsoft, Meta among others and have announced multiple rounds of layoffs.
Sweet said that they have been dealing with difficult challenges of compounding wage inflation which in turn affecting the pricing. But they are doing it with cost efficiencies and digitising. They have identified an opportunity for more structural costs and improve their P&L going forward.
KC McClure, Chief Financial Officer, Accenture mentioned that the layoff action will roughly impact 2.5% of 19000 current workforce. Nearly half of this 19000 employees will leave by the end of this fiscal year 2023.
The costs estimates for the company are $1.2 billion expenditure for severance and $300 million for office space consolidation with approx. $800 million of the stated costs will be incurred in fiscal 2023 and another $700 million in fiscal 2024.
Adding headcount is not estimated by the company during the third quarter but it may be considered during the fourth quarter (June-August) of the year.
Business Outlook
An adjusted earning per share of $2.69 is reported by the consulting firm for this second quarter that ended in February. In local currencies the revenue came up by 9% to $15.81 billion from the same period the prior year.
New deal booking was recorded $22.1 billion for the quarter where consulting booking is of $10.7 billion and managed services booking is of $11.4 billion.
“We Do Feel Good About Our Pipeline, Even After Our Record Bookings This Quarter, Our Sales Outlook For Q3 Is Solid. We Expect To Have Slightly Less, Lighter Bookings Compared To The Record Quarter That We Just Had,” Said McClure.
Sweet mentioned that there is a pressure in North America but the company predicts good growth in Europe and other markets. The company also mentioned that as they were not much exposed to the small regional banks they are not much impacted by the current banking crisis of the Silicon Valley Bank Collapse.