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.’
Consulting Business Down Even As Managed Services Rise
While Accenture’s managed services business during the quarter rose 12 percent over last year to $7.54 billion, the company’s consulting revenue actually fell 1 percent to $8.28 billion. The gap between growth rates of the two parts of the company’s business could increase going forward, as consulting bookings during the quarter totaled $10.7 billion compared to $11.4 billion for managed services bookings.
Sweet said that consulting revenue was below expectations, but that she is not concerned given Accenture’s shift towards larger transaction deal.
“Last quarter, we thought consulting this year would be mid-single digits to high single digits. We now see it as mid-single digits for the year, and we’re fine with that, right? Because that’s about kind of lower S&C (Strategy and Consulting) and SI smaller deals. … It’s because sort of the caution that’s impacting the smaller deals, record sales, great large transformational deals.
Accenture’s S&C business in the current fiscal quarter will be similar to that of the second quarter, Sweet said.
“It may take a little bit longer to reconnect with growth,” she said. “But remember, we don’t look at that as separate. We see S&C as a competitive differentiator for these larger transformational deals, which is our strategy.”