Salem Radio Network News Thursday, December 7, 2023

Business

Accenture’s revenue forecast disappoints as IT spending weakness persists

(Reuters) -IT consulting firm Accenture forecast fourth-quarter revenue below Wall Street estimates on Thursday on worries that rising economic uncertainty will keep IT budgets tight and prevent businesses from signing fresh contracts.

Demand for IT services in the United States remains weak and might be impacted further after U.S. Federal Reserve Chairman Jerome Powell’s congressional testimony on Wednesday hinted at the likelihood of further interest rate hikes.

Cognizant Technology Solutions last month said it faced pressure in signing smaller contracts due to softer discretionary spending. India‚Äôs outsourcing giant Tata Consultancy Services said in April that U.S. recovery hadn’t materialized as expected and had, in fact, worsened.

Accenture forecast current-quarter revenue in the range of $15.75 billion to $16.35 billion. Analysts on average expect revenue of $16.35 billion, according to Refinitiv data.

Shares of the company fell 5.5% in trading before the bell.

Accenture said in March it would lay off 19,000 employees, trimming a workforce that had burgeoned during the pandemic. Its workforce jumped about 16% and 23% in fiscals 2022 and 2021 respectively and it said it aims to have cost savings of $1.5 billion through fiscal 2024.

However, CEO Julie Sweet said the company had 26 clients with quarterly bookings of $100 million or more.

Accenture’s new bookings, or deals in the pipeline, grew 2% to $17.2 billion in the third quarter.

Revenue for the quarter ended May 31 was $16.56 billion, in line with estimates. Excluding items, Accenture earned $3.19 per share compared to estimates of $3.04.

(Reporting by Chavi Mehta in Bengaluru; Editing by Pooja Desai)

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