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Accenture warns that Elon Musk’s efforts to reduce US government spending have begun to affect revenues, and consulting groups also highlight the threat from global economic uncertainty.
The company said Thursday that the new U.S. government job, which accounted for around 8% of global revenue in the last quarter, slowed sharply after President Donald Trump’s administration took office in January.
“The new administration has a clear goal of running the federal government more efficiently. During this process, many new procurement measures have been slowed down, which has negatively impacted sales and revenue,” said Julie Sweet, CEO of Accenture during an analyst call.
Accenture’s stock fell almost 10% on Thursday, the lowest level since last June. They later fell 8% at $300.04.
As some analysts had anticipated, the company did not cut its full-year revenue guidance, but admitted that the new trend in the business was “very recent.”
Accenture is one of ten consulting companies targeted by the Trump administration in oppression of spending, organized by Musk’s so-called Office of Government Efficiency (DOGE).
Last week, a federal filing revealed that by 2027, the potentially Accenture contract, which amounts to an additional business of up to $5 million, was “end for convenience.” The contract, which already has $10 million spent since 2021, was the 10th Accenture or subcontract agreement that ended under the Trump administration.
The General Services Agency, which helps coordinate federal procurement, said departments and agencies should also prove the value of consulting contracts with 10 companies, including Deloitte, Booze Allen Hamilton and IBM.
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“We continue to believe that work for federal clients is mission-critical, but as government priorities evolve and these assessments unfold, we anticipate continuous uncertainty,” Sweet warned.
However, she said: “We look at great opportunities to support federal integration, modernization and reform, and promote a whole new level of efficiency.”
Last month, Accenture abolished its global diversity and inclusion goals after a “assessment” of the US political landscape. The day after the inauguration, Trump ordered federal contractors to pledge that they do not have a DEI program that violates the anti-discrimination laws.
“In recent weeks, we have seen levels of rise that have already been significant in the global economic and geopolitical environment, indicating a transition from the first quarter of December,” Sweet said.
“It’s unclear how management guidance should be reviewed due to ongoing volatility,” Jefferies analyst Surinder Thind said in a note to client.
Additional Reports by London Criskook
