(Reuters) - IT services provider Accenture (NYSE:ACN) cut its fiscal-year 2024 revenue forecast on Thursday as economic uncertainty prompts clients to curb spending on its consulting services, sending its shares plunging around 7% in morning trading.
Accenture now expects full-year revenue growth in the range of 1% to 3%, from its earlier growth forecast of 2% to 5%.
The firm 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 pandemic.
That has led the company to lay off employees, with Accenture 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.
"We saw another turn of the dial on constraining spending by our clients, including spending on our services, particularly in parts of EMEA and North America," CEO Julie Sweet told analysts in an earnings call.
Rivals Tata Consultancy Services (NS:TCS) and Infosys (NS:INFY), two of India's top IT consulting firms, also reported downbeat quarterly results earlier this year as spending dries up.
Analysts from Baird Equity said growth in the industry has been decelerating over the past six quarters and that it "might take a couple of years for Accenture to return" to mid- to high-single-digit organic growth.
The company 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' average estimate of $15.84 billion.
On an adjusted basis, the company earned $2.77 per share, compared with an estimate of $2.66 per share.