'Anxiety at peak': Accenture layoff move jolts Indian IT professionals

“What does non-billable function mean?”

“I am non-billable, am scared as…”

“I have completed stream training and awaiting project allocation, should I be worried??”

India’s IT professionals are writing about their worries on a community app after IT services firm Accenture said on Thursday it will lay off 19,000 employees globally.

Accenture said that as part of its second quarter of fiscal 2023 results, cost optimisation efforts will “impact” 2.5 per cent, or 19,000 of its 738,000 employees. Of the 19,000, over half are from non-billable functions. The company has more than 300,000 employees in India, one of its largest offshore centres. Industry sources said Accenture’s announcement could impact around 2,000-2,500 people in India.

“Panic and anxiety at peak,” wrote an Accenture employee on Grapevine, a community app used by IT professionals in India.

“The people impact is estimated to be 2.5 per cent of our current global workforce. This may differ by market and by country, as a consequence of our different footprint and growth, and should not be taken as a figure applicable to all geographies,” said a spokesperson for Accenture.   

Engineering talent in India earlier dealt with big tech companies Meta (Facebook), Amazon, Alphabet (Google’s parent) and Microsoft laying off employees: Accenture’s announcement makes their anxiety worse.

Tech giant IBM said last month it will lay off 3,900 people globally. Analysts said Accenture’s action reflects the work of Indian IT services companies as they all follow a similar business model.

Kamal Karanth, cofounder of Xpheno, a specialist staffing company, said that layoffs, like by tech giants, is the result of exuberant hiring a year ago and the resultant expansion.

"During the buoyancy, many enterprises scaled up in high-cost geographies too... so with the softening of business, as seen in the BFSI segment now, workforce restructuring and resizing are inevitable," he said, referring to the banking, financial services and insurance (BFSI) sector.

Karanth added that the IT industry is recording attrition of some 12-13 per cent, implying talent is being hired.

Accenture said that its hiring for Q3 will probably be minimal. It reported that utilisation for the quarter ended February 28, 2023 was at 91 per cent, perhaps the highest when compared to other tier-one IT players.

Accenture’s management said that for a record quarter (Q2), the company managed to deliver with the existing talent base. “We have skills and all the people we need to deliver to demand in this market. Looking forward, we did not add people from Q1 to Q2. We see that being the same for Q2 and Q3. We may add headcount in Q4,” said Julie Sweet, chief executive officer of Accenture, during an earnings call on Thursday.

Indian engineers worry that other tier-one companies may also take similar action. “It is generally like that. Most of these firms will follow what Accenture does. My fear is that we may have to see layoffs at Indian IT players too,” said an IT employee who didn’t want to be named.

Accenture’s announcement of not adding people is a trend seen elsewhere in the IT sector. For instance, TCS had a negative headcount growth in Q3 FY23. Infosys and Wipro’s hiring numbers were softer too. Several IT players are yet to visit campuses to hire freshers.

HR experts said layoffs are shaping salary hikes and hiring. “People who earlier managed unrealistic hikes--the likes of more than 100 per cent--will come under the radar. We may see some layoffs impacting this category as well,” said A R Ramesh, director of managed services & professional staffing, at Adecco India.

“Companies have gone overboard in hiring. Could this situation (layoffs) be handled in a much better way? I suppose companies should also own up to this as well,” he said.