Accenture Plc shares tumbled after the consultancy said its US government work has slowed amid Elon Musk's cost-cutting push.
The company, with nearly 800,000 employees around the world, said new procurement actions had decreased amid President Donald Trump's spending crackdown, hurting its sales and revenue. Accenture Chief Executive Officer Julie Sweet said on a call discussing earnings that federal services accounted for about 8% of its global revenue and about 16% of its Americas revenue in the 2024 fiscal year.
The company reported $16.7 billion of revenue in the three months through February, a 5% increase on the prior year. Accenture's shares fell by more than 10%, the most since March 2020, before paring some of those losses.
Musk's Department of Government Efficiency has taken aim at consulting deals as an example of what the administration deems wasteful spending. The government has told all federal agencies to review their contracts with the 10 highest-paid consulting firms that do work with the government, including Accenture. Agencies were given until March 14 to justify their contracts with the firms, Bloomberg has reported.
“While we continue to believe our work for federal clients is mission critical, we anticipate ongoing uncertainty as the government's priorities evolve and these assessments unfold,” Sweet said.
Accenture also said it updated the so-called risk factors in its annual report to include that government work “exposes us to additional risks inherent in the government contracting environment.”
So far, the General Services Administration — the US federal procurement agency — has canceled 1,700 consulting contracts resulting in $4.5 billion in savings, Bloomberg reported this month.
“We are seeing an elevated level of what was already significant uncertainty in the global economic and geopolitical environment,” Sweet said. “At the same time, we believe the fundamentals of our industry remain strong and we are very well-positioned with our clients.”
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