Accenture to lay off 19,000 employees, lowers revenue guidance for FY23

US-based IT major Accenture on Thursday announced to lay off 19,000 employees, or 2.5% of its global workforce, over the next 18 months as the company looks forward to streamline operations. According to the company’s SEC (Securities and Exchange Commission) filing, Accenture had approximately 7,38,000 workforce as of February 28, 2023. With the latest round of layoffs, the company’s workforce is likely to reduce to 7,19,000 employees.

"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. Over the next 18 months, these actions are expected to result in the departure of approximately 19,000 people (or 2.5% of our current workforce), and we expect over half of these departures will consist of people in our non-billable corporate functions," the company says in a statement.

"For the second quarter of fiscal 2023, attrition, excluding involuntary terminations, was 12%, down from 18% in the second quarter of fiscal 2022. We evaluate voluntary attrition, adjust levels of new hiring and use involuntary terminations as a means to keep our supply of skills and resources in balance with changes in client demand," the company adds.

Besides, the company has also lowered its annual revenue and profit forecasts. The company now estimates the annual revenue growth to be between 8-10%  compred to 8-11% of the previous projections.

For the second quarter of fiscal 2023, the company's gross margin revenue was 30.6%, compared with 30.1% for the second quarter of fiscal 2022. The gross margin for the six months ended February 28, 2023, was 31.7% compared with 31.5% for the six months ended February 28, 2022. Operating margin (Operating income as a percentage of Revenues) for the second quarter of fiscal 2023 was 12.3%, compared with 13.7% for the second quarter of fiscal 2022. The operating margin for the six months ended February 28, 2023, was 14.4%, compared with 15.0% for the six months ended February 28, 2022. 

According to Accenture, during the three and six months ended February 28, 2023, the company recorded $244 million in business optimisation costs, primarily for employee severance. "As part of these business optimization initiatives, we expect to record total costs of approximately $1.5 billion, with approximately $800 million in fiscal 2023 and $700 million in fiscal 2024. The $1.5 billion is expected to consist of $1.2 billion of employee severance and other personnel costs and $300 million related to the consolidation of office space," the company says.