Accenture feels the brunt amid DOGE's warning that contracts will be cut

Informational tech giant, Accenture Plc's shares fell after the firm reported that the tightening of United States federal spending spearheaded by Elon Musk affected their revenue.

The shares fell by 7.3 per cent. The Chief Executive Officer, Julie Spellman Sweet in a fiscal second-quater earnings call stated that the Federal Services decision of the company lost contracts with the US government following recent government reviews, according to a report by CNBC.

Sweet said, “Federal represented approximately 8 per cent of our global revenue and 16 per cent of our Americas revenue in FY 2024." She added “The new administration is focused on running the government more efficiently, which has slowed many procurement actions, negatively impacting our sales and revenue.”

Trump administration's Department of Government Efficiency (DOGE), an effort to cut and streamline the federal government's workforce headed by Elon Musk has turned its focus to consulting deals. Accenture is the first company to feel the brunt.

Federal Agencies have been instructed by the US General Services Administration (GSA) to review contracts with the top 10 highest-paid consulting firms and terminate non-essential agreements.

“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 said.

Sweet highlighting the prevailing uncertainty in the global economic and geopolitics sphere said, “We are seeing an elevated level of what was already a significant uncertainty in the global economic and geopolitical environment, marking a shift from our first quarter FY 2025 earnings report in December."

“At the same time, we believe the fundamentals of our industry remain strong,” she added.

Though the company reported better-than-expected earnings of $2.82 per share on $16.66 billion revenue, Accenture’s stock fell sharply as investor concerns over reduced government spending took center stage.

According to the report, over the past month, Accenture shares have plunged 22.9 per cent, bringing the stock down nearly 14.5 per cent year-to-date.