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According to Group Accenture, IT Consulting and Outsourcing Group, the uncertainty of “significantly rising” economic and geopolitical uncertainty has left business leaders short for employing consultants for several new projects.
The company reported a slowdown in new operations in the second quarter, bringing stocks down nearly 8% in early Wall Street trading on Friday.
The company beat revenue expectations, but for the three months ended May 31, new bookings fell 6% to $19.7 billion, raising concerns about its long-term growth outlook. Both consulting and managed services businesses posted lower bookings than they did a year ago.
“The level of uncertainty in the global economic and geopolitical environment continues to rise significantly compared to the 2024 calendar year,” CEO Julie Sweet said in a revenue call. “In every boardroom, in every industry, our clients are not facing a single challenge. They are faced with everything at once: economic volatility, geopolitical complexity, (changing) customer behavior.”
With slower than usual bookings for small, discretionary consulting projects, Accenture is focused on bigger digital transformation projects. Sweet said that business leaders were not sitting on the sidelines, but were willing to do “the biggest thing that will make a difference.”
The company is also dealing with a slowdown at Accenture Federal Services, which has been affected by efforts to reduce spending by President Donald Trump.
The US federal government accounts for around 8% of Accenture’s revenue, and the company says it will be a headwind of revenue growth for the next quarter. Sweet said it was “too early to assume” around next year, but said the company was affected by cancellations of existing contracts and slowing down new jobs.
Accenture is one of ten consulting companies specifically asked to withdraw contracts or lower prices to save government money.
A Financial Times analysis of federal contract data shows that 28 Accenture contracts have been “end for convenience” since Trump took office in January. These include four large umbrella contracts approved nearly $1 billion for spending from Health and Human Services, the Department of Home Affairs and the Department of Treasury.
FT analysis confirms that Accenture saw a sharp slowdown in new jobs from the federal government. According to the official database, it plans to pay $643 million in 2024 for work commissioned over the three months ended in May for just over half of the same period.
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Jefferies analyst Surinder Thind said bookings have been softer than expected for the second quarter in a row. “The updated guidance means that growth will continue to slow down, which is worth calling,” he said.
Accenture said the workforce has shrunk as more staff voluntarily left, from the record 801,000 to the record 801,000 at the end of February.
The company also announced on Friday the departure of three senior executives, including consulting business chief executive Jack Azagaree and its technology business CEO Karthik Narain, as well as remodeling the organizational structure. The five major business units will be combined under the leadership of Manish Sharma, who currently runs Accenture in the United States.
