After cutting 11,000 employees in three months, IT consulting giant Accenture warns employees: If they cannot accept "retraining" in the AI era, more people will leave
Accenture stated that the layoff actions will continue until the end of November, having paid $615 million in severance and other costs in the recently concluded quarter, with an additional $250 million to be paid in the current quarter. CEO Julie Sweet told analysts on a conference call, "For those employees for whom retraining is not feasible and who cannot acquire the necessary skills, we are compressing the timeline for their departure."
Global IT consulting giant Accenture has laid off more than 11,000 employees in the past three months and warned employees that those who cannot reskill in the era of artificial intelligence will face more layoffs.
On September 25, Accenture stated that as of the end of August, the total number of employees was 779,000, down from 791,000 three months ago. The layoff actions will continue until the end of November, and the company paid $615 million in severance and other costs in the recently concluded quarter, with an additional $250 million expected to be paid in the current quarter.
On the same day, Accenture announced an $865 million restructuring plan and issued a stern warning. CEO Julie Sweet told analysts on a conference call:
"Based on our experience, for those employees for whom retraining is not feasible and who cannot acquire the skills we need, we are compressing the timeline for their departure."
Analysts pointed out that the $865 million restructuring plan highlights Accenture's determination to transform in the AI era. The company has positioned "upskilling transformers" as a core investment direction while unhesitatingly eliminating employees who cannot adapt to new skill requirements.
Accenture's stock price fell 2.7% on Thursday, closing at its lowest level since November 2020.
The Pressure of AI Transformation Behind Large-scale Layoffs
The scale of Accenture's layoffs has shocked the market. Sweet emphasized that the core logic behind this layoff is the changing skill demands in the AI era. The company currently has 77,000 AI or data professionals, a significant increase from 40,000 two years ago.
At the same time, generative AI projects brought in $5.1 billion in new orders for the company in the recently concluded fiscal year, up from $3 billion the previous year.
Sweet stated that the overall number of employees will grow again in the coming year, "We are investing in enhancing our transformers' skills, which is our main strategy."
This large-scale layoff allows Accenture to maintain its historic profit growth targets. The company stated that it will continue to expand its operating profit margin at an annual growth rate of at least 10 basis points in the next fiscal year, a target that analysts had previously worried might be abandoned due to deteriorating industry conditions.
Accenture's revenue grew 7% to $69.7 billion in the fiscal year ending in August, with net income increasing 6% to $7.83 billion. However, the company expects revenue growth to slow to between 2% and 5% in the newly started fiscal year.
The tightening of spending by the U.S. federal government has significantly impacted Accenture's performance outlook. The company stated, if it were not for government spending cuts, revenue growth expectations could have been one percentage point higher. Historically, the U.S. federal government accounts for about 8% of Accenture's revenue.
Cost-cutting efforts led by the government efficiency department (DOGE) previously headed by Musk have canceled existing IT contracts and questioned other consulting expenditures. Meanwhile, layoffs in government departments have also slowed down procurement processes
