While Accenture has decided to shift its promotion cycle from December to July, the company may still continue to stick to the December cycle for a section of employees in India, sources aware of the development told FE.
Further, there will be no changes to compensation or wage hikes as part of this transition, sources added. Accenture has as a large portion of its workforce is based in India.
The shift in the promotion cycle by the company is the latest sign of a prolonged slump that’s hurt the wider consultancy industry.
The news saw Accenture’s shares drop nearly 5% on the New York Stock Exchange. This triggered a similar reaction in domestic IT stocks, including Tata Consultancy Services and Infosys, which fell on the National Stock Exchange, as investors worried that the expected demand for IT services remains distant.
However, the global IT major told FE that the decision to change promotion cycle is not a response to the current economic climate but a strategic move to optimise alignment with client needs and company growth trajectories.
“We are permanently changing our primary promotion date from December to June, which is when we have better visibility of our clients’ planning and demand,” Accenture India told FE.
This shift by Accenture mirrors actions taken by other industry giants like McKinsey, Ernst & Young, and PricewaterhouseCoopers, which have also adapted their staffing and promotion strategies in response to the evolving market conditions.
Accenture’s strategic adjustment is a proactive measure to better align with client engagement cycles, particularly crucial during Q2 and Q3, which traditionally involve significant client interaction and strategic planning.
Both the IT services and consultancy industry has faced various challenges due to higher interest rates and other macroeconomic crisis, especially in the US and Europe.
Accenture had reduced its revenue forecast for the fiscal year 2024 between 1.5% and 2.5%, down from the earlier projection of 1% to 3%, in its March-May quarter stating that economic uncertainties continue to prompt clients to cut back on consulting services spending. Accenture follows a September-August financial year.
“As we absorb kind of higher selling costs, which you would expect, looking at our record 60 billion of booking, and also the continued pressure and pricing that we’ve had across our business. So with that, we feel really good,” the company’s management had said in an earnings call.
The company is set to release its final quarter earnings on September 26. The IT giant’s earnings are closely watched as they can predict broader trends for Indian IT companies.
In the third quarter, Accenture reported revenues of $16.5 billion, a 1% decrease compared to the same period last year. However, new bookings surged by 22% to $21.1 billion, and the operating margin was flat at 16.3% year-on-year.
From: financialexpress
Financial News
