Accenture warns Musk’s Doge-led spending crackdown is hurting revenues

Consulting firm Accenture said that Elon Musk’s efforts to cut costs across the US federal government were starting to hurt its profits. This is not a new statement. The US companies, including his are suffering the same fate. This is simply going to deaf ears. 

Accenture is one of 10 consulting companies that the Trump administration is going after as part of Musk’s DOGE crackdown on wasteful spending.

Today, the company said that new work for the US government slowed sharply after President Donald Trump’s administration took office. It accounted for about 8% of its $16.7bn in global revenue in the quarter ended February 28.

Accenture chief executive Julie Sweet during an analyst call, said,  “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.”

A federal filing from last week said that an Accenture contract that could have brought in up to $5 million in extra work by 2027 had been terminated for convenience. As of now, $10 million has been spent on this contract since 2021. It was the tenth Accenture contract or subcontract that the Trump government ended.

Accenture proves its value to GSA

The 10 highest-paid government consulting companies will earn $65 billion in fees between 2025 and beyond. The General Services Administration told departments and agencies that they had to prove the value of their consulting contracts with the other 10 companies or get rid of them.

Julie Sweet has her answer. She said, “We see major opportunities over time for us to help consolidate, modernize, and reinvent the federal government to drive a whole new level of efficiency.”  Accenture had also said it was ending its DEI programs.

However, she warned, “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.” 

Some experts thought the company would lower its earnings forecast for the whole year. It didn’t happen. Instead, it said that the new business trends were very recent. Meanwhile, it looks like Accenture shares will open at their lowest level since July of last year. This was because they dropped more than 5% in pre-market trading today. 

Consulting firms on the brink of losing millions from the government

The 10 consulting firms are Deloitte Consulting LLP,  Accenture Federal Services LLC, General Dynamics IT, Booz Allen, Hamilton, Leidos, Guidehouse, Hill Mission Technologies Corp., Science Applications International Corp., CGI Federal, and IBM.

Booz Allen Hamilton may be the only consulting firm that stands to lose as much. The company gets 98% of its business from the US government, and its contracts include everything from web services for national parks to hacking tools for the defense industry.

In a recent interview, Booz Allen Hamilton’s CEO, Horacio Rozanski, said that the company works more like a tech company than a consulting firm. However, he may have said this to separate the company from the bad reputation that consultancies have.

Revenues for Booz Allen Hamilton were $2.92 billion, which is 13.5% more than the same time last year. This print was 1.7% better than what experts were expecting. For the most part, it was a good quarter for the company.

Unfortunately, since Trump took office in January, Booz Allen Hamilton’s stock has dropped by about 30%. However, it has risen slightly since the beginning of March. 

Other consulting firms have long been criticized for sending government agencies huge bills. They have now tried to fix the problems Deloitte caused when it told its workers to remove pronouns from their email signatures. These actions were likely meant to please the Trump administration.

McKinsey, on the other hand, has been mostly banned from getting contracts from the US federal government. This was after having to pay hundreds of millions of dollars in court settlements for their work for Purdue Pharma promoting highly addictive opioid drugs. Congressmen also asked a lot of questions about the company’s work with the Chinese government. 

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