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.
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Joseph F. Kovar is a senior editor and reporter for the storage and the non-tech-focused channel beats for CRN. He keeps readers abreast of the latest issues related to such areas as data life-cycle, business continuity and disaster recovery, and data centers, along with related services and software, while highlighting some of the key trends that impact the IT channel overall. He can be reached at [email protected].
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