ADR (American Depository Receipt) shares of IT majors Infosys and Wipro ended lower on Wall Street on March 21 after Accenture cut its 2024 revenue forecast, as an uncertain economy prompts clients to curtail spending on its consulting services. Accenture’s shares ended lower over 9% in New York in one of the sharpest intraday drop since March 2020.
Accenture now expects full-year revenue growth in the range of 1% to 3%, from its prior forecast of 2% to 5%.
Accenture has been grappling with sluggish demand for its IT and consulting services as high interest rates slam the brakes on an industry that benefited from breakneck growth during the Covid pandemic. The latest results hint at the economic uncertainty in global markets that is affecting consultancies and lead to layoffs or a freeze on hiring.
“The corporates have put themselves on a diet,” CEO Julie Sweet told analysts in a conference call. "They are not able to allocate extra budget."
Tata Consultancy Services and Infosys, two of India's biggest IT services firms also reported downbeat quarterly results earlier this year as spending dries up. They will be announcing their fourth quarter results next month.
Accenture has also forecast third-quarter revenue in the range of $16.25 billion to $16.85 billion, below an estimate of $17.01 billion, according to LSEG data.
New bookings, a key indicator of future revenue, fell 2% to $21.58 billion for the second quarter, while revenue for its Communications, Media & Technology segment fell 8% year-over-year.
Accenture reported revenue of $15.80 billion, slightly lower than analysts' estimate of $15.84 billion. Accenture is set to book $450 million in severance-related costs this fiscal year after recording $1.1 billion the previous year when it said it would cut around 19,000 jobs, or 2.5% of its workforce.
The tech-laden Nasdaq led Wall Street higher on Thursday as chip stocks rallied following Micron Technology's upbeat forecast, while investors took comfort in the Federal Reserve sticking to its three-rate-cut view for this year.
With inputs from Reuters and Bloomberg.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
