Accenture warned on Thursday that Elon Musk's government efficiency-led cost-cutting measures will undermine revenue as multi-million dollar contracts are cancelled and stocks will fall 7%.
Julie Sweet, CEO of the consulting giant, told investors that the company is experiencing a notable slowdown in securing new contracts from the US government.
The US government contract accounted for about 8% of Accenture's global revenue, or $1.333 billion of the total revenue of $16.7 billion for the quarter ending February 28th.
“The new administration has a clear goal of running the federal government more efficiently. During this process, many new procurement measures have been slowed down, negatively affecting sales and revenue,” Sweet says.
The reduction in government spending comes as part of a broader campaign pushed by Musk's Doge, which aims to reduce federal spending by scrutinizing contracts with consulting companies.
Accenture and nine other major consultants, including Deloitte, IBM and Booz Allen Hamilton, were directly affected by this policy change.
IBM stock fell more than 8% last month, while Booz Allen Hamilton stock fell more than 6% over the same period.
Deloitte is a private company.
A federal filing disclosed last week showed that the previously awarded Accenture contract, which could potentially draw another $5 million by 2027, was suddenly “ends due to convenience.”
The deal has already generated around $10 million in revenue since its inception in 2021, marking the 10th contract lost by Accenture under the new Trump administration guidelines.
The General Services Agency, the governmental agency responsible for overseeing federal procurement activities, said the agency must clearly demonstrate the value and necessity of consulting contracts.
If these contracts cannot be justified, the department must be terminated as part of an ongoing efficiency measure.
Sweet highlighted the important nature of Accenture's federal project, but acknowledged uncertainty about the future.
“We continue to believe that work for federal clients is mission-critical, but as government priorities evolve and these assessments unfold, we anticipate ongoing uncertainty,” she warned.
Despite the turbulence, Sweet said he hopes that government contracts will increase in future.
“We see a long-term great opportunity to support federal integration, modernization and reform to promote a whole new level of efficiency,” she said.
Accenture was born in 2001 as Andersen Consulting, Arthur Andersen's business and technology consulting arm, before officially separating and rebranding it.
The company, originally based in Chicago, moved its head office to Dublin, Ireland in 2009. This cites a more business-friendly tax environment.
Since then, Accenture has grown into a global leader in consulting and technology services, operating in over 120 countries.
Last week, Trump accused Ireland of withdrawing drug jobs and tax revenues away from the United States, criticizing the country's tax policy that allows businesses to report profits there without physically producing all the drugs.
The multinationals are headquartered in Ireland due to business-friendly regulations and access to the European Union market due to a low corporate tax rate of 12.5%.
American companies such as Apple, Google, Facebook, Microsoft, Pfizer and Intel have established European or international headquarters to exploit tax incentives, skilled labor and favorable intellectual property laws.
Ireland's tax policy faces scrutiny, but the country remains an attractive destination for global companies due to its stable economy and strategic location.
The post is being asked for comment from the White House and Accenture.
