Accenture job cuts 'a sign of cost reduction'

28 August 2009

Accenture's recent decision to reduce its number of senior executives is an example of the firm looking to reduce its cost base by "as much as possible" in the present economic climate, it has been suggested.

According to Martin Hart, chairman of the National Outsourcing Association, the fact the company focuses on outsourcing means that it is more likely to be affected by underlying costs than finance companies.

This, he noted, means that the firm "has to be very canny" and control its costs more carefully than businesses such as banks, which have a high turnover and can afford to pay their senior management high salaries.

"Accenture are seeing not as many outsourcing contracts as they would like to see, so therefore to maintain their profits or their margins they have to cut down somewhere," he remarked.

It is estimated the restructuring, which also includes reducing office space, will cost the business $247 million in pre-tax charges.

Mr Hart also noted that the move by the organization - which has affected around seven per cent of its total senior management workforce - should not be seen as a sign that there is a problem at the firm, commenting that a reduction of between 50 to 60 per cent would be a more serious issue.

However, some have suggested that the job reduction could extend past Accenture's senior executives.

Writing for ZDNet, Brian Sommer said that staff lower down in the employment chain may also be made redundant as a result, due to the fact that they will no longer be needed to support those in senior positions.

He stated it is probable that "considerably more" than the estimated 336 executives will lose their jobs, but argued that it is unlikely the full 13,000 employees that could be affected will find themselves unemployed.

Written by Gary Cooper

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