Key Takeaways
- Accenture shares lost ground following reports that the professional services firm will postpone staff promotions.
- The move comes amid a challenging environment for the consultancy industry as clients take a cautious approach to spending.
- Citi analysts said near-term headwinds could weigh on Accenture’s growth trajectory, but they maintain a positive view on the stock.
Accenture (ACN) shares fell Tuesday following reports that the business strategy and consulting giant plans to delay promotions by six months as it navigates the challenging environment facing the consultancy industry.
According to Bloomberg, Accenture informed employees in an internal message that the majority of promotions will now occur in June—a departure from the professional services firm’s typical practice of awarding promotions in December. A company representative said Accenture will shift its main window for promotions to June when the firm says it has more visibility into client strategies and demand levels.
Losses of nearly 5% on Tuesday dropped Accenture shares into negative territory for 2024.
Headwinds in Consultancy Industry
Accenture’s decision to push back promotion season for its workers comes amid a challenging environment for the professional services business, with corporate clients tightening their spending in response to macroeconomic uncertainty.
Accenture is not the only consulting company making staffing-related adjustments as it navigates the industry slowdown. McKinsey, Ernst & Young, and PricewaterhouseCoopers have reduced their headcount. However, recent demand for automation and artificial intelligence (AI) projects has alleviated some of the pressure on employment levels in the industry.
In a note to investors on Monday, Citi analysts pinpointed several overhangs facing Accenture over the remainder of 2024, including macroeconomic conditions, persistent inflation, and the election cycle. Although these issues could weigh on growth, creating some uncertainty surrounding 2025 forecasts, Citi maintained its “buy” rating on Accenture stock and boosted its price target to $405 from $350.