Accenture to ‘exit’ staff that cannot be retrained for age of AI
Group details $865mn restructuring programme and outlook reflecting sluggish corporate demand for consulting projects
Accenture has reduced its global workforce by more than 11,000 in the past three months and warned staff that more would be asked to leave if they cannot be retrained for the age of artificial intelligence.
The IT consulting group on Thursday detailed an $865mn restructuring programme and an outlook for the year ahead that reflects continuing sluggish corporate demand for consulting projects and a clampdown on spending within the US federal government.
“We are exiting on a compressed timeline people where reskilling, based on our experience, is not a viable path for the skills we need,” chief executive Julie Sweet told analysts on a conference call.
The company employed 779,000 people at the end of August, it said, down from 791,000 three months earlier, after beginning a round of lay-offs that will continue until the end of November. It did not say how many jobs had gone directly as a result of the restructuring, but said severance payments and other costs totalled $615mn in the quarter just ended and would be $250mn more in the current three-month period.
The cuts allowed Accenture to say it would continue to expand operating profit margins at its historic annual rate of at least 10 basis points in the next fiscal year, a target that some analysts had worried might have to be dropped given the tough industry conditions.
While demand for large-scale digital transformation work continues to be strong, for much of the past two years companies have been wary about hiring consultants such as Accenture for shorter-term projects.
The company said revenues grew 7 per cent to $69.7bn in the year to August, for a net income of $7.83bn, up 6 per cent.
It predicted revenue growth would slow to between 2 and 5 per cent in the fiscal year just started. The range would have been a percentage point higher but for the clampdown on spending by the US federal government, which has historically accounted for about 8 per cent of Accenture’s revenue.
A cost-saving effort under the auspices of the Department of Government Efficiency, initially spearheaded by Elon Musk, has cancelled existing IT contracts and challenged other spending on consultants, while lay-offs across government has slowed the procurement process.
Accenture said that generative AI projects accounted for $5.1bn of its new bookings in the year just ended, up from $3bn the year before. It said 77,000 of its workforce were now skilled AI or data professionals, up from 40,000 two years before.
Sweet said that Accenture’s headcount would grow again overall in the coming year. “We are investing in upskilling our reinventors, which is our primary strategy,” she said.
Accenture shares were down 3.2 per cent during Thursday lunchtime trading on Wall Street.
SOURCE: https://www.ft.com/content/a74f8564-ed5a-42e9-8fb3-d2bddb2b8675