Accenture has announced that it will axe about 400 jobs from its Irish workforce as part of a decision to cut 19,000 jobs across the group in the next 18 months.
The Irish headquartered group said on Thursday that it expected to incur staff severance costs of $1.2 billion (€1.1 billion) and a further $300 million of expenses from the “consolidation of office space”.
“After a careful review of our business operations, we can confirm that we are going into collective employee consultation for a proposed redundancy programme that is anticipated to affect approximately 400 of our people in Ireland,” a spokesman for the company said.
Accenture is based in Ireland for tax and legal purposes after relocating here from Bermuda in 2009 when then US president Barack Obama was targeting overseas profits in countries, like Bermuda, that the US regarded as tax havens.
That 400-job target means Accenture’s 6,500-strong Irish workforce will be more dramatically affected than colleagues in other countries, contrary to the trend of recent redundancies among multinationals. It means that just over 6 per cent of Irish staff will lose their jobs compared to a rate of around 2.5 per cent globally.
It is the latest in a series of cuts across the consulting sector globally as companies battle rising costs and an uncertain economic outlook, with rivals McKinsey and KPMG both announcing significant job losses in recent months.
On an earnings call with analysts, chief executive Julie Sweet characterised the cuts as “offensive” rather than defensive, to ensure Accenture kept to its long-term profitability targets in a high-inflation environment.
“We’ve been dealing with the challenges of compounding wage inflation,” she said. “We’ve been doing that with pricing, but we’ve also been doing that with cost efficiencies and digitisation and we’ve identified an opportunity to go after structural cost.”
The company has enjoyed explosive growth in recent years as demand for advice on tech projects from multinationals ballooned. It has been on a hiring binge, adding more than 230,000 staff since August 2020. The company says it will continue to hire staff “especially to support our strategic growth priorities”.
Accenture announced the cuts alongside its results for the three months to February, when it reported revenues of $15.8bn, a 5 per cent increase on the same period a year earlier.
Half of the 19,000 employees will leave by the end of August, the company told analysts on Thursday. More than half of the cuts are expected to affect staff who work in corporate functions but serve clients directly, the company said.
Accenture announced the cuts alongside its results for the three months to February, when it reported revenues of $15.8 billion, a 5 per cent increase on the same period a year earlier.
Consulting revenues at the group fell 1 per cent to $8.3 billion while sales by the managed services, or outsourcing, division grew 12 per cent to $7.5 billion. Operating income dropped 5.8 per cent to $1.9 billion in the quarter.
Surinder Thind, analyst at Jefferies, noted that Accenture’s consulting revenues fell short of expectations, in contrast to a still-booming outsourcing business, and “the need for cost-cutting raises questions of what growth will look like beyond the end of the fiscal year”.
Despite the troubled economic outlook, the company said it had secured a record $22.1 billion of bookings for new work during the three months to February. It has trimmed its estimated revenue growth for the financial year that ends in August from 8-11 per cent to 8-10 per cent.
Accenture said it estimated that about $800 million of cost-cutting expenses would be incurred by the end of August with a further $700 million in the following 12 months. It said it had already incurred $244 million in “business optimisation costs” in the three months to February. – Additional reporting, The Financial Times Limited 2023
