Technology consultancy giant Accenture Plc. said today it is planning to cut 19,000 jobs, or about 2.5% of its workforce, over the next 18 months.

It will be the largest round of dismissals so far in a consultancy sector that is struggling against strong economic headwinds.

Accenture said in a filing it will incur employee severance and other costs of about $1.2 billion due to the layoffs, and that it will spend an additional $300 million over the period on office space consolidation. In addition, the company lowered its revenue forecast, saying it expects sales to grow by 8% to 10% this year, down from an earlier forecast of 8% to 11%.

The news is the biggest sign yet that the tech consultancy industry is suffering amid economic uncertainty that has already had a big impact on the wider technology sector. In February, one of its rival firms, McKinsey & Co. announced plans to cut 2,000 jobs, while KPMG International Ltd. has said it will cut 700 jobs in the U.S. Ernst & Young Global Ltd. also said recently it will reduce its hiring target by thousands.

The layoffs at Accenture dwarf the moves made by its rivals. It said that over half of the job cuts will affect workers in nonbillable corporate functions, such as its human resources, legal and financial departments.

Interestingly, Accenture plans to continue hiring going forward. In late 2021 it announced it is hoping to create 3,000 new technology jobs in the U.K. over the next three years, and said today that it’s still committed to doing so. According to Accenture Chief Executive Julie Sweet, the company is looking to reduce its costs in fiscal 2024 and beyond, “while continuing to invest in our business and our people.”

Industry watchers observed that as economic headwinds increase, many enterprises are cutting back on their investments in high-priced consulting firms focused on business strategy recommendations, in favor of more business outcome-focused services.

“Right now companies need business outcomes not high-priced business recommendations,” Future Tech Enterprise Inc. CEO Bob Venero told CRN. “When you have an economy like we are in now with companies looking to do more with less they are not going to spend money with consultants making strategic recommendations.”

Accenture’s shareholders reacted positively to the news of the layoffs, as its share price climbed more than 8% in extended trading today. The company also reported a 13% increase in bookings, to a record $22.1 billion in its second-quarter earnings report. Revenue increased 5% to $15.8 billion, though its net income fell to $1.53 billion, from $1.64 billion in the same period a year earlier.

Photo: JiriMatejicek/Accenture