Accenture CEO Julie Sweet said that the tightened US federal spending is weighing on its revenue. During the company’s fiscal second-quarter earnings call, Sweet said “As you know, the new administration is focused on running the government more efficiently, which has slowed many procurement actions, negatively impacting our sales and revenue”. She further revealed that the company’s Federal Services business has lost contracts with the US government after recent reviews.
“Federal represented approximately 8% of our global revenue and 16% of our Americas revenue in FY 2024”, she stated during the earnings call. “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 shares fall by 7.3%
Following the company’s announcement, Accenture’s shares declined by approximately 7.3%, making it one of the first US corporate giants to feel the impact of the Trump administration’s Department of Government Efficiency, DOGE. Established during President Donald Trump’s second term and led by tech billionaire Elon Musk, DOGE has initiated significant federal job cuts as part of its mission to streamline government operations and reduce public expenditure. It is a cost-cutting initiative, aimed at downsizing federal agencies and consolidating office spaces.
Sweet stated that Accenture’s Federal Services division was also impacted by new guidance from the US General Services Administration, which directed federal agencies to review contracts with the 10 highest-paid consulting firms and terminate those deemed non-essential to their missions.
“We are seeing an elevated level of what was already a significant uncertainty in the global economic and geopolitical environment, marking a shift from our first quarter FY 2025 earnings report in December,” the CEO added. “At the same time, we believe the fundamentals of our industry remain strong.”
