In three months, Accenture, the IT consulting giant, laid off 11,000 people and warned employees: if you can't adapt to "retraining" in the age of AI, more people will have to leave.

In three months, Accenture, the IT consulting giant, laid off 11,000 people and warned employees: if you can't adapt to "retraining" in the age of AI, more people will have to leave.

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Global IT consulting giant Accenture has laid off more than 11,000 employees in the past three months and warned staff that those unable to reskill in the age of artificial intelligence will face further layoffs.

On September 25, Accenture announced that its total headcount as of the end of August was 779,000, down from 791,000 three months prior. The layoff action will continue until the end of November. In the just-ended quarter, the company paid $615 million in severance and other costs, and another $250 million will be paid in the current quarter.

On the same day, Accenture unveiled an $865 million restructuring plan and issued a stern warning. CEO Julie Sweet told analysts on a conference call:

"Based on our experience, for employees for whom retraining is not viable and who cannot acquire the skills we need, we are accelerating their departure."

Analysts have pointed out that the $865 million restructuring plan highlights Accenture's determination to transform in the AI era. The company is making "upskilling of transformers" a core investment focus, while not hesitating to eliminate employees who cannot keep up with the new skill requirements.

Accenture’s share price fell 2.7% on Thursday, closing at its lowest level since November 2020.

The AI Transformation Pressure Behind Mass Layoffs

The scale of Accenture's layoffs has shocked the market. Sweet emphasized that the core logic behind this round of layoffs is the changing skill demands of the AI era. The company currently has 77,000 AI or data professionals, a significant increase from 40,000 two years ago.

At the same time, generative AI projects brought in $5.1 billion in new orders for the company in the just-concluded fiscal year, up from $3 billion the previous year.

Sweet stated that the company’s overall headcount will increase again in the coming year, "We are investing in enhancing the skills of our transformers, which is our main strategy."

This round of mass layoffs enables Accenture to maintain its historic profit growth targets. The company said it will continue to expand its operating margin by at least 10 basis points annually in the next fiscal year, a target that analysts had feared might be abandoned due to a worsening industry environment.

Accenture’s revenue grew 7% to $69.7 billion in the fiscal year ending in August, and net income rose 6% to $7.83 billion. However, the company expects revenue growth in the just-begun fiscal year to slow to between 2% and 5%.

Austerity in U.S. federal government spending is having a significant impact on Accenture’s performance outlook. The company said if it weren’t for the government spending cuts, projected revenue growth would have been one percentage point higher. Historically, U.S. federal government business accounts for about 8% of Accenture’s revenue.

Cost-cutting efforts led by Musk’s previously headed government efficiency department (DOGE) have already canceled existing IT contracts and questioned other consulting expenditures. Meanwhile, layoffs in government departments have also slowed down procurement processes.

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