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Consulting giant Accenture warned that Elon Musk’s efforts to slash costs across the US federal government had started to affect its revenues and geopolitical developments had raised economic uncertainty around the world.
The company said on Thursday that new work for the US government, which accounted for about 8 per cent of its $16.7bn in global revenue in the quarter ended February 28, slowed sharply after President Donald Trump’s administration took office.
“The new administration has a clear goal to run the federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue,” said Accenture chief executive Julie Sweet during an analyst call.
Accenture is one of 10 consulting firms targeted by the Trump administration in the spending crackdown orchestrated by Musk’s so-called Department of Government Efficiency (Doge).
Last week, a federal filing disclosed that an Accenture contract potentially worth up to $5mn of additional business by 2027 had been “terminated for convenience”. The contract, under which $10mn has already been spent since 2021, was the tenth Accenture contract or subcontract terminated under the Trump administration.
The General Services Administration, which helps to co-ordinate federal procurement, said departments and agencies needed to prove the value of consulting contracts with the 10 firms — which also include Deloitte, Booz Allen Hamilton and IBM, among others — or cancel them.
“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 warned. However, she said: “We see major opportunities over time for us to help consolidate, modernise and reinvent the federal government to drive a whole new level of efficiency.”
Accenture shares were on course to open at their lowest level since July last year, after falling more than 5 per cent in pre-market trading on Thursday. The company did not cut its full-year earnings guidance, as some analysts had expected, but it admitted that the new trends in the business were “very recent”.
“In recent weeks, we are seeing an elevated level of what was already significant uncertainty in the global economic and geopolitical environment, marking a shift from our first quarter in December,” Sweet said.
Surinder Thind, analyst at Jefferies, said in a note to clients that “with ongoing volatility, it’s unclear how confidently management’s guidance should be viewed”.
Additional reporting by Chris Cook in London
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