Accenture to fire 7,000 in India as part of global cuts

Job search firm Indeed announces laying off

Accenture Plc aims to terminate at least 7,000 of its around 350,000 employees in India as the world’s largest information services business prepares to let go of 19,000 individuals or 2.5% of its worldwide staff in the next 18 months.

The move represents the first big layoff announcement by a prominent IT services provider this year. Accenture now joins the ranks of Big Tech firms like Alphabet, Amazon, Meta, and Microsoft who have all disclosed over 70,000 job layoffs since January due to concerns that a global recession could hinder growth.

For engineers at domestic technology services companies like Tata Consultancy Services Ltd, Infosys Ltd, and HCL Technologies Ltd, which up till now have avoided any company-wide layoffs, Accenture’s decision to let go of staff, for now, may be cause for concern.

Accenture merely states that it employs more than 300,000 people and does not specify how many of those are in India. Nonetheless, Mint discovers that the nation is home to around 350,000 of its 37% global workforce.

Accenture increased its employee base by a net of 424 over the most recent quarter of December to February, bringing the total to 7,38,143. After the business saw a workforce reduction of 7,496 employees during the quarter from June to August of 2020, this is the weakest rate of net employee addition in ten quarters.

“These actions are anticipated to have a 2.5% or 19,000 impact on our current workforce, of which more than half perform non-billable corporate functions and include more than 800 of our market and service leaders, “K.C. McClure, the chief financial officer of Accenture, said. “By the end of FY23, almost half of the 19,000 people will have left.” “About half of the new hires over the past two years came from India. Therefore, we can anticipate that these actions will have an impact on anywhere between 2% and 2.5% of our employees who are based in India “On the condition of anonymity, a senior executive said.

According to estimates, 2.5% of the workforce in the world today will be affected. This may vary by market and by country due to our varied footprint and growth, so it shouldn’t be interpreted as a number that applies to all geographies “A representative for Accenture declined to comment on the proportion of workers in the nation who will be affected.

Accenture hired 232,410 people in the past 10 quarters, or from 1 September 2020 to 28 February.

Accenture, which has a fiscal year that runs from September to August, reported mediocre earnings on Thursday as some of its clients in the communications, technology, and media sector reduced their workload.

Sales climbed 5.1% from the year-ago period to close with $15.81 billion in the December-February quarter, the slowest business growth in over 10 quarters. The most recent year-over-year growth that Accenture reported was 3.5% between September and November of 2021.

Soft growth in Accenture’s consulting business, which generates about 52% of total revenue, is at the root of the company’s underperformance. At times of a recession, clients, from huge banks to large retailers, first cut back on any transformational work, consequently harming the likes of substantial consulting work conducted by businesses like Accenture and EY.

For the latest quarter, consultancy revenue was $8.28 billion, a 1% reduction from the year-ago period. Clients from communication, technology and media accounted for $2.88 billion in revenue, a 4% decline from the December-February period last year.

Despite the fact that the firm anticipates full-year profitability in the range of 14.1% and 14.3% for the year ending in August 2023, operating margin decreased by 140 basis points from 13.7% in the prior quarter to 12.3% in the most recent one.

According to the website, which tracks tech job losses, 152,858 people were laid off by 517 startups and established businesses worldwide in the first three months of 2023.

Analysts, for now, continue to maintain most homegrown IT giants will continue to hire fewer people instead of going for large-scale layoffs.

“Our channel checks don’t suggest that anything significant has changed since the companies declared third-quarter earnings. So, we will be astonished if any of the big companies announce any corporate layoffs,” said an analyst with a foreign brokerage located in Mumbai.

Many anticipate a rise in demand in the following 12 to 18 months.

“The collapse of Silicon Valley Bank, Signature Bank and the merger of Credit Suisse/UBS due to liquidity concerns has brought uncertainty to banking tech budgets. Corporate commentaries on the BFSI industry have started to become more cautious. Banking is an important vertical with a revenue mix of 15-35% throughout our coverage,” Rahul Malhotra and Sanjit Shinde, analysts at AllianceBernstein, wrote in a 22 March note. “We anticipate growth to go up in the second half of FY24 and to level off over a two-year cycle. The multi-year trend of the cloud-driven digital transformation will continue to support double-digit growth in the medium term. As sales growth for IT businesses slowed by 15+ QoQ ppt and values fell to all-time low multiples (5-10x), we don’t see the present financial crisis as a contagion similar to the GFC.

TCS experienced a sequential headcount decline of 2,197 during the December quarter, while Wipro Ltd. experienced a decline of 435, from 259,179 employees at the end of 30 September to 258,744 at the end of 31 December. According to a Mint analysis, Tech Mahindra Ltd., the fifth-largest provider of technology services, experienced the largest sequential decrease in headcount at a major IT services provider in the previous two decades at 6,844.