Why Accenture slashed 19,000 jobs worldwide

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Accenture plans to cut 19,000 jobs globally as it attempts to cut costs in the face of a bleak economic outlook.

In a Thursday filing, the Irish-American professional services firm said it would spend $1.2 billion on severance to cut 2.5% of its workforce over the next 18 months, and another $300 million to consolidate its office space.

According to the company, more than half of the axed positions would be among back-office personnel.

Accenture (ACN), which has 738,000 employees worldwide, stated in its most recent quarterly report to the Securities and Exchange Commission that it has “initiated actions to streamline [its] operations and transform our non-billable corporate functions to reduce costs.”

The $167 billion company reduced its revenue growth forecast for the fiscal year 2023 to between 8% and 10%, down from 8% to 11% previously.

Accenture shares rose 3.9% to $263 in early trading following the announcement. Over the last year, the stock has dropped by more than 5% on the New York Stock Exchange.

Accenture’s competitors are also attempting to cut costs. According to the Financial Times, consulting giant KPMG announced last month in an internal memo that it would cut nearly 2% of its US workforce due to dwindling client demand.

Bloomberg reported last month that McKinsey could lay off up to 2,000 non-consulting employees in one of its largest round of layoffs ever, citing unnamed sources close to the matter.

It’s more than just feeling the pinch. Thousands of tech workers have been laid off in recent months as higher interest rates, inflation, and recession fears have caused a drop in advertising and consumer spending.

Last week, Facebook-parent Meta announced plans to lay off another 10,000 employees, the company’s second round of significant job cuts in four months. Taken together, the cuts will result in a 25% reduction in Meta headcount.