Accenture to Cut Work Force 2 Percent
- By Gail Repsher Emery
- Aug 17, 2001
Accenture Ltd. is reducing its staff by approximately 1,500, or about 2 percent of the its global work force, the company announced Aug. 17. It also is expanding its new sabbatical program to temporarily idle about 1,000 employees in Europe and Asia.
The Hamilton, Bermuda, management and information technology consulting firm employs more than 75,000 in 46 countries.
The permanent staff reduction will affect about 1,000 consulting personnel, mostly in the United States, and about 500 support personnel worldwide. The company also will delay the start dates of about 1,000 new consultants, said chief financial officer Harry You in an Aug. 17 conference call with financial analysts.
The actions are necessary because of the continuing slowdown in the global economy and Accenture's lowest attrition rate in years, said Joe Forehand, chairman and chief executive officer.
"With voluntary attrition rates in the low single digits in some parts of the world, and temporary excess capacity due to a shift in our business mix from shorter-term consulting projects to a greater focus on longer-term business transformation outsourcing, we are taking these actions after our normal annual budget review and management plan to ensure that our staffing levels are better balanced with client demand," Forehand said.
Accenture will see rapid, substantial cost savings associated with its personnel actions, You said, although he declined to state a specific dollar figure.
Expanding the FlexLeave sabbatical program to Europe and Asia will allow the company to manage its staff more effectively, Forehand said. Participating consultants receive 20 percent of their salaries and continuation of employer-provided benefits for six to 12 months.
Employees targeted for participation in the newest wave of the sabbatical program are working in Germany, the United Kingdom, Japan and Sweden, Director of Investor Relations Carol Meyer said during the conference call.
The sabbatical program was introduced in the United States in June and in Canada, Australia and New Zealand in July. More than 1,000 U.S. consultants and several hundred in Canada, Australia and New Zealand are participating, You said.
Accenture will expense most of the costs associated with these actions on its income statement in the fourth quarter ending Aug. 31, and will not take a restructuring charge, a company statement said. You said the cost would be about $50 million.
Accenture also announced that its board of directors voted to authorize the repurchase of up to $150 million worth of shares of its common stock from time to time in the open market. The timing and amount of any such repurchases will be at the discretion of the company and will be based on market conditions and other factors.
Accenture said the decision to authorize share repurchases reflects that it believes its shares are undervalued and represent an attractive investment opportunity as a result of market conditions. Accenture's stock closed Aug. 17 at $14.52, up from $14.05 the day before.