Accenture, a global leader in consulting and IT services, is grappling with a significant revenue hit due to tightened federal spending in the United States.
During the company’s fiscal second-quarter earnings call, CEO Julie Sweet highlighted the challenges posed by shifting government priorities and procurement actions.
The announcement has sent ripples across the industry, with Accenture’s stock plunging by 7.3% following the disclosure.
Accenture Revenue Challenges: Impact of Federal Spending Cuts
The revenue decline is largely attributed to the Trump administration’s Department of Government Efficiency (DOGE), a controversial initiative led by Elon Musk.
DOGE aims to streamline government operations by downsizing federal agencies and consolidating office spaces.
As part of this cost-cutting measure, the U.S. General Services Administration (GSA) has instructed federal agencies to review contracts with the top 10 highest-paid consulting firms, including Accenture Federal Services.
Accenture’s Federal Services division, which accounted for approximately 8% of the company’s global revenue and 16% of its Americas revenue in FY2024, has been significantly impacted.
The GSA’s directive to terminate non-essential contracts has resulted in the loss of key agreements, further exacerbating the revenue decline.
Elevated Uncertainty in Global Landscape and Opportunities Amid Challenges
Julie Sweet also pointed to heightened uncertainty in the global economic and geopolitical environment.
Factors such as U.S. tariffs, global macroeconomic conditions, and geopolitical tensions have weighed heavily on tech spending.
Despite these challenges, Accenture has narrowed its FY2025 revenue growth guidance to 5-7%, reflecting cautious optimism.
While the current scenario presents significant hurdles, Julie remains optimistic about potential opportunities arising from the shifts in government priorities.
She emphasized Accenture’s expertise in helping federal and commercial clients consolidate, modernize, and reinvent operations to achieve greater efficiency.
Accenture’s revenue hit has broader implications for the consulting and IT services industry.
The company’s stock decline has triggered a ripple effect, with shares of other firms like Booz Allen Hamilton also experiencing a downturn.
Analysts are closely monitoring the situation, particularly its impact on Indian IT firms with substantial exposure to the U.S. market.
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