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.’
Getting Ahead Of ‘Structural Issues’
Accenture CEO Julie Sweet told Wall Street analysts that the systems integration behemoth, ranked No. 1 on CRN’s 2022 Solution Provider 500, is using cost-cutting efforts, including the layoff round of 19,000 employees, or 2.5 percent of the workforce, as a way to get ahead of “structural issues that have been created over the last couple of years.”
The economic headwinds in the market have resulted in a “laser focus” on costs by customers with fewer smaller deals in strategy and consulting, Sweet told analysts.
“We’re seeing less of the smaller deals in S&C (Strategy and Consulting) and to some extent, SI (Systems Integration), particularly in North America, where we’re seeing more caution,” Sweet said. “North America had record sales this quarter, but in areas tending towards the bigger transformational deals, not the smaller S&C and to some extent, SI deals.”
[Related: Accenture’s Most Highly Compensated Executives In 2021]
When asked by an analyst whether Accenture is playing offense or defense, Sweet said she likes how that question was phrased.
“I like that, is it offense or defense,” she said. “It is offensive. I mean, if you look at where we are today, we’ve got record bookings, a strong view of the year at 8 percent to 10 percent [revenue guidance for fiscal 2023], 91 percent [utilization of our people]. We’re going after structural costs to ensure that we’re in a better position.”
Accenture has also been dealing with the difficult challenges of compounding wage inflation with both pricing and with cost efficiencies and digitizing, Sweet said.
“And we have identified an opportunity to go after more structural costs to kind of create that resilience and that room in the P&L (profit and loss statement) as we look forward,” she said. “[We’re] very much, in our view, getting ahead of and dealing with these structural issues that have been created over the last couple of years.”
Sweet had a lot of questions from analysts about Accenture’s performance and its plans in the face of uncertain economic times. CRN breaks down what Sweet had to say.
Steve Burke contributed to this story.
