Accenture: DOGE's Federal procurement review is hurting our sales

Accenture says Federal procurement projects are continuing to slow since Elon Musk's Department of Government Efficiency began reviewing ways to cut costs last month, and this is directly impacting its business.

The admonition came in a conference call to discuss the latest earnings for Accenture's Q2 of fiscal 2025 [PDF], ended February 28. CEO Julie Sweet told financial analysts:

"As you know, the new administration has a clear goal to run the Federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue."

Accenture's Federal Services division accounted for around 8 percent of global revenue and 16 percent of Americas revenue in fiscal 2024, she said.

DOGE, as Musk's unit is called, has laid claim to an estimated $115 billion with 30 percent of the savings said to come from contract, grant and lease cancellations. A granular breakdown of the total was not disclosed.

Some of the sweeping, haphazard changes have raised an eyebrow or two, with thousands of federal employees tossed out, including people working in CISA, the National Science Foundation and many more.

The share price for Accenture slid 7.3 percent to $300.91 as the market closed yesterday, and is down 15 percent since President Donald Trump was inaugurated for the second time. No doubt many readers are playing the world's smallest violin for the tech consultancy.

Sweet continued:

"In addition, recently, the General Service Administration has instructed all federal agencies to review their contracts with the top 10 highest paid consulting firms contracting with the US government, which includes Accenture Federal Services.

"The GSA's guidance would determinate contracts that are not deemed mission-critical by the federal - by the relevant federal agencies. 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."

There is, however, an "opportunity" to help consolidate, modernize, and reinvent the federal government to drive a whole new level of "efficiency," the CEO added. IBM and Deloitte are also among the top ten highest paid consultant having to justify their contracts to Trump's government.

For Accenture's Q2, revenues went up 5 percent year-on-year to $16.7 billion and net income grew to $1.82 billion from $1.709 billion. Comms, media, and tech accounted for $2.73 billion in revenues, up 3 percent.

New bookings fell 3 percent to $20.9 billion, including $1.4 billion from generative AI.

Accenture did't reduce its revenue outlook for the rest of its financial year.

Sweet also sounded an alarm bell about the state of the wider private sector economy. "We are seeing an elevated level of what was already significant uncertainty in the global economic and geopolitical environment."

No doubt volatile trade policies from the man in the Oval Office aren't helping. ®