Accenture Warns of 1.5% Revenue Drop Due to U.S. Federal Spending Cuts

Accenture, a leading global consulting and outsourcing firm, has warned that the contraction of U.S. federal spending will significantly impact its revenue growth for the upcoming fiscal year. The company anticipates that the slowdown in its U.S. federal business will reduce its revenue by 1% to 1.5% during the fiscal year ending in August 2026. Accenture has projected that, excluding this impact, its revenue growth is expected to range between 3% and 6%.

The firm's fourth-quarter revenue reached $17.6 billion, marking a 7.3% year-over-year increase. This growth, however, is tempered by the anticipated slowdown in federal spending, which Accenture attributes to broader economic trends and policy shifts. The company's new orders for the fourth quarter were substantial, indicating continued demand for its services despite the headwinds. The firm's new orders for the fourth quarter were $21.3 billion, with the total new orders for the year amounting to $80.6 billion. Notably, the new orders for generative AI were $1.8 billion for the quarter and $5.9 billion for the year, highlighting the growing demand for AI-driven solutions.

Accenture's cautionary outlook reflects a broader trend of fiscal conservatism within the U.S. government, which is likely to affect other companies reliant on federal contracts. The firm's ability to navigate this challenging environment will be crucial in maintaining its market position and ensuring sustainable growth. Accenture's strategic focus on diversifying its revenue streams and expanding into new markets will be essential in mitigating the impact of reduced federal spending. The company plans to increase its workforce in all global markets, including the U.S. and Europe, to meet growing customer demands. Additionally, Accenture is investing in training its employees to leverage AI technologies more effectively, with plans to provide proxy AI training to over 700,000 employees. This training aims to enable autonomous operations and enhance collaboration between AI and human workers.

Despite the challenges posed by the contraction in federal spending, Accenture remains optimistic about its future prospects. The company's CEO, Julie Sweet, highlighted that the 7% annual revenue growth to $69.7 billion demonstrates the firm's unique ability to create value for clients seeking AI-driven transformations. Accenture's commitment to returning at least $9.3 billion in cash to shareholders in the new fiscal year, an increase of approximately $1 billion from the previous year, underscores its confidence in its financial health and growth potential. The firm's proactive approach to addressing the challenges ahead positions it well to continue delivering value to its clients and shareholders in the years to come.