Managed services News
Accenture CEO Julie Sweet On Layoffs, Belt-Tightening, And Going After ‘Structural Costs’
Joseph F. Kovar
Addressing a company optimization push that includes the layoffs of 19,000 employees, or 2.5 percent of the workforce, as well as real estate tightening, Accenture CEO Julie Sweet told Wall Street analysts the systems integration behemoth is going on a cost-cutting ‘offensive’ to get ahead of ‘structural issues that have been created over the last couple of years.’
Driving Hypergrowth Despite Wage Inflation
When asked whether customer focus on costs could lead to slightly lower growth rates because of the cost optimization actions Accenture is taking, Sweet replied that Accenture has been achieving hypergrowth despite compounding wage inflation like no one today has ever experienced.
“There’s been wage inflation like none of us have ever experienced and it’s compounding,” she said. “And we’ve been addressing that through a combination of improved pricing, cost efficiencies, and so this is really us taking a step back and being able to more structurally address the impact of compounding wage inflation. So it’s a real positive for how we’re moving forward.”
In fact, Sweet said that the cost cutting and belt tightening is “creating more room” in the Accenture “P&L” (profit and loss statement) so that the company continues to deliver on its “enduring shareholder” value proposition.
“We still expect next year to grow faster than the market,” she said. “We expect to invest at scale in our business, to deliver 10 to 30 basis point margin expansion on an adjusted basis, to have a disciplined capital allocation including a meaningful return to our shareholders. So that is a commitment. This is an offensive move to say, ‘Yes, today, we’ve got great demand, we’ve got great utilization, and we can take out more structural costs to put us in a better position as we move forward.’”
The cost cutting comes even as Accenture enjoys a utilization rate of 91 percent, Sweet said.