Shares of Accenture plc (NYSE: ACN) were trading -4.82% lower in the pre-market trading Thursday. This drop comes as the company predicts fourth-quarter revenue to be lower than expected, raising concerns about the impact of economic uncertainty on IT budgets and the ability of businesses to sign new contracts.
The demand for IT services in the United States remains weak, and it may be further affected following U.S. Federal Reserve Chairman Jerome Powell’s recent congressional testimony, which hinted at the possibility of additional interest rate hikes.
Cognizant Technology Solutions recently disclosed difficulties in signing smaller contracts due to reduced discretionary spending. India’s outsourcing giant, Tata Consultancy Services, also said in April that the anticipated recovery in the United States did not materialize as expected and had, in fact, worsened.
Accenture’s forecast for the current quarter places its revenue in the range of $15.75 billion to $16.35 billion. However, analysts on average project revenue of $16.35 billion.
Earlier this year, Accenture announced plans to lay off 19,000 employees as part of its effort to reduce costs. The company experienced significant workforce growth during the pandemic, with increases of approximately 16% and 23% in fiscal 2022 and 2021, respectively. Accenture aims to achieve cost savings of $1.5 billion by fiscal year 2024.
Nevertheless, Accenture’s CEO, Julie Sweet, highlighted that the company maintains a strong client base. Specifically, they have 26 clients with quarterly bookings of $100 million or more.
In terms of new bookings, Accenture saw a 2% growth in the third quarter, reaching $17.2 billion in deals in the pipeline.
For the quarter ended May 31st, Accenture reported revenue of $16.56 billion, which aligned with expectations. Excluding certain items, Accenture’s earnings were $3.19 per share, surpassing estimates of $3.04 per share.