AFTER LAYING OFF EMPLOYEES AT ACCENTURE, BIG IMPACT ON THE COMPANY? - REPORT! 

With COVID-19 crisis affecting IT companies, many firms are laying off employees due to the economic dip. A recent layoff of hundreds of UK staff at Accenture was a shock to employees. This big step was taken up as the economic damage caused by the COVID-19 pandemic became clearer. 

Last month, Accenture announced it was cutting 900 jobs from its UK workforce of 11,000 employees, due to economic slowdown to be the reason. Soon after the news went viral, other services firms must be at least considering similar cuts. This laying off came at a time when the impact of the pandemic on business levels across the sector was anecdotal.

According to Computerweekely.com report, what was known was that business levels in the first quarter of the year were down, and that only included a couple of weeks of the Covid-19 pandemic disruption. After being months in lockdown the picture is now becoming clearer, with figures to help decision-makers take stock. 

The second quarter, as expected, bore the brunt of the IT and BPO services slowdown according to the latest figures from technology advisory ISG, with all three months of the period ravaged by COVID-19, Computerweekely.com further report.  

Also, the lockdown in different countries saw consumer activity with least exposure and businesses were being propped up by governments. Even, the global IT outsourcing and business process outsourcing sector reduced in value by 5 percent after the value of traditional outsourcing contracts saw a double-digit decline.

Getting into details on the total value of contracts; as per research by ISG, the total value signed globally during the quarter was $13.2bn (£10.5bn), a drop of 5 percent from the same period last year. Looking into other factors like traditional outsourcing - it was hit hardest, with total spending on these services down 16 percent. 

Meanwhile, specialist IT outsourcing lawyer Mark Lewis commented on it saying, business levels are down as projects are put on hold. “I think that job cuts at Accenture UK certainly reflect the wider industry. To make the story even more depressing, Accenture is a bellwether for the IT services industry at scale. So others won’t be far behind," Lewis said.  

Commenting on the level of cuts at Accenture, Lewis further added that he is surprised at the level of cuts at Accenture as 8 percent of its workforce in the UK. He also questioned whether this reflects the UK market for IT services, or just that it is cheaper and easier to lay off staff than in France and Germany?

Further giving hope to the IT services industry, Lewis added that the pandemic has left a scar on the IT services industry and it will be clearer in September. He also expects that the UK will come back strongly when the shape of the UK’s economy becomes clearer. “Whatever happens, there will be opportunities for IT services. For me, a more interesting question is: will there be more activity for IT products or services providers or will the winners be a combination of both?," he said.

“Times like these force companies to take a much longer, harder look at staffing levels, required skills bases, and the like.  And this is an unprecedented time, so I think that companies are taking the chance now to consider questions they haven’t had the time, inclination or opportunity to do," Lewis added. 

Meanwhile one senior IT executive in the UK banking sector, was not surprised that Accenture made so many UK cuts and does not expect the jobs to come back. "Part of the problem for companies like Accenture is that banks, that are major customers, are increasingly looking to avoid pay over inflated prices for management consultants. Management consultancies are very expensive operations and banks are realising that there are other ways of getting that experience without paying the huge cost. It is no surprise these companies are reducing staff in the UK where it is expensive," a senior IT executive said.