The announcement of 890 job cuts at Accenture in Ireland is an unwelcome reminder that the fallout from the tech slowdown has not yet passed. Accenture employs many people who are effectively outsourced workers for big tech players like Meta and Google.
It is notable that it has now announced a second round of cutbacks, having announced the layoff of 400 staff only recently. The latest cuts amount to close to 14 per cent of its staff of around 6,500. After years of expansion of the company – which accelerated during the pandemic – it is a significant change of direction.
The question now is whether the worst of the cutbacks in the wider tech sector are over. The share prices of many of the big firms have rebounded, though in most cases they remain well off previous highs and the flow of new stockmarket flotations has not restarted. Investors remain cautious.
There is no reason to expect a collapse in employment in the sector, but what had seemed a relentless jobs boom looks to be over, for now at least. Even if skills shortages remain in some parts of the industry, there are signs of a slowdown in professional recruitment.
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The health of the sector has wider implications for the jobs market and the economy. It is a significant provider not only of direct jobs but also indirect employment, which goes well beyond companies such as Accenture to a host of professional service firms, contractors, services providers and others. Tech giants have also been big occupiers of office space and activity in this market has fallen sharply this year as they cut their requirements.
Ireland’s jobs market, after a period of strong expansion which has brought employment to a record 2.8 million, looks to be topping out. This is a trend to watch. So is the flow of inward investment after mid-year results from IDA Ireland which were solid but below the 2022 record levels.
The wider context consists of a series of threats to global growth. The big US firms operating here are reliant on the American economy and on international markets, most of which have been hit by a decline in growth, due in part to higher interest rates.The strong rebound in economic growth after the Covid lockdowns is over.
This has implications for Ireland. The international profits of the big tech and pharma companies have driven Ireland’s corporation tax receipts in recent years. Mid-year figures remain strong but the outlook over the next two to three years is now hard to gauge.
The multinational engine which has helped to pull the economy to such strong growth in recent years may continue to move forward, but at a significantly slower speed.