Accenture: History Of A Fortune500 Firm That's Laying Off 2.5% Of Its Staff

IT services and consulting giant Accenture said in a filing on Thursday, that it was laying off 19,000 employees as part of a cost-cutting drive. The move comes despite the fact that the company reported double-digit revenue growth in the second quarter of FY23.

About 2.5 per cent of Accenture's 738,000 employees worldwide will be impacted. India might take the lion's share most of the layoffs as 300,000=plus employees live and work here.

Accenture announced revenues of $15.8 billion for the second quarter of fiscal 2023, which concluded on February 28, 2023, up from $15.05 billion in the corresponding period the previous year. The net income, however, has fallen to $1.55 million from 1.66 million a year ago. The fiscal year for Accenture is September through August.

For the fiscal year 2023, the company has lowered its top end of projection from 11 per cent to expect revenue growth of 8-10 per cent in FY23.

Chief Executive Officer Julie Sweet said the company is seeing the kind of wage inflation never seen earlier, which is what it was addressing so far through a combination of digitising, improved pricing and cost efficiencies.

Accenture PLC is a Dublin-based Irish-American professional technology services company that provides strategic, tactical, digital, and operational consulting support to clients. It is a Fortune Global 500 company with revenues of $61.6 billion in 2022.

Headquartered in Dublin, Ireland, the company serves over 9,000 clients worldwide, including 89 of the Fortune Global 100 and more than three-quarters of the Fortune Global 500, across all industries.

Accenture was the world's largest consulting firm by head count in 2022. Julie Sweet has been the CEO of Accenture since September 1, 2019 and the chair since September 2021.

Accenture has offices in over 200 cities across 49 countries.

A look at Accenture’s history:

Accenture was born as a business and technology consulting division, when General Electric wanted to install a computer at the Appliance Park in Louisville, Kentucky, in the early 1950s. It was then known as the Administrative Services arm of the accounting firm Arthur Andersen, headed by Joseph Glickauf, also known as the father of computer consulting.

Glickauf had earlier unveiled his "Glickiac" computer, convincing the partners to invest in the emerging technology practice.

The Andersen Worldwide Société Coopérative (AWSC) split up Arthur Andersen and Andersen Consulting in 1989 as the conflict between Arthur Andersen and Andersen Consulting grew throughout the 1990s, as Andersen Consulting began to outperform the firm that had founded it in terms of profitability, the consultants began to grumble about sharing their profits with the accountants.

The ruling freed Andersen Consulting, with 65,000 employees, from its parent company, Arthur Andersen, a tax and auditing firm with 77,000 employees,by the International Court of Arbitration. In exchange, Andersen Consulting had to give up its name and pay $1 billion to Arthur Andersen. As a result, Accenture was born.

On January 1, 2001, Andersen Consulting changed its name to "Accenture." Kim Petersen, a Norwegian employee, proposed it and it was chosen through an internal contest—Accenture for "accent on the future."

Accenture's initial public offering (IPO) in 2001 was priced at $14.50 per share, with 115 million Class A common shares being offered, representing approximately 12 percent of the company's equity, and the shares trading on the New York Stock Exchange. Accenture raised nearly $1.7 billion on the first day of its IPO. Goldman Sachs and Morgan Stanley were among the underwriters for the IPO

Accenture has grown rapidly since, with the so-called "Big Three" consulting firms of McKinsey & Co., Boston Consulting Group, Inc., and Bain & Co. as their main competitors.

Accenture now has 31 offices in India, with over 300,000 people. Women make up 47 per cent of its workforce.

Today, Accenture's underperformance stems from soft growth in its consulting division, which accounts for roughly 52 per cent of total revenue. The last quarter's consultancy revenue was $8.28 billion, a one per cent dip from the previous year's same period. Revenue from clients in the communication, technology, and media sectors totaled $2.88 billion, down 4 per cent from the year-ago period.

Accenture added 424 net employees over the most recent quarter of December to February, bringing the total to 738,143, the slowest rate of net employee addition in 10 quarters.

The company has stated that hiring for the third quarter will most likely be minimal. It reported that utilisation for the quarter ended February 28, 2023 was 91 per cent, possibly the highest among tier-one IT players.

Accenture's management stated that the company delivered a record quarter (Q2) with its existing talent base. "We have all the skills and people we need to meet demand in this market. We did not hire anyone from Q1 to Q2 in the future. We anticipate the same for Q2 and Q3. We may add headcount in Q4," said Sweet, during an earnings call.