Accenture stock falls 7% after Elon Musk’s DOGE cancelled $5 million contract with the consulting giant

Accenture warned Thursday that cost-cutting measures led by Elon Musk’s Department of Government Efficiency will hurt its revenue because several multi-million dollar contracts were canceled sending shares tumbling 7%.

The consultancy giant’s CEO Julie Sweet told investors on an earnings call that the company was experiencing a notable slowdown in securing new contracts from the US government.

US government contracts constituted around 8% of Accenture’s global revenues or $1.33 billion out of its total revenue of $16.7 billion for the quarter ending Feb. 28 the company 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,” Sweet said.

The reduction in government spending comes as part of a broader campaign driven by Musk’s DOGE, which aims to reduce federal expenditures by scrutinizing contracts with consulting companies.

Accenture and nine other major consultancies including Deloitte, IBM, and Booz Allen Hamilton have been directly impacted by this policy shift.

Shares of IBM have fallen by more than 8% in the last month, while Booz Allen Hamilton stock is down more than 6% during the same period.

A federal filing disclosed last week indicated that a previously awarded Accenture contract, which had the potential to bring in up to an additional $5 million by 2027, was abruptly “terminated for convenience.”

This contract had already generated around $10 million in revenue since its inception in 2021 and marked the 10th such contract lost by Accenture under the Trump administration’s new guidelines.

The General Services Administration, the government body responsible for overseeing federal procurement activities, stated that agencies must clearly demonstrate the value and necessity of their consulting contracts.

If departments are unable to justify these agreements, they are now required to terminate them as part of the ongoing efficiency measures.

Sweet emphasized the critical nature of Accenture’s federal projects but acknowledged future uncertainties.

“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,” she cautioned.

Despite the turbulence, Sweet said she expects contracts with the government to increase in the future.

“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,” she said.

Accenture originated as Andersen Consulting, the business and technology consulting division of Arthur Andersen, before formally separating and rebranding as Accenture in 2001.

Initially based in Chicago, the company relocated its headquarters to Dublin, Ireland, in 2009  citing a more business-friendly tax environment.

Since then, Accenture has grown into a global leader in consulting and technology services, operating in over 120 countries.

President Trump last week accused Ireland of drawing pharmaceutical jobs and tax revenues away from the US, criticizing the country’s tax policies that allow companies to report profits there without physically producing all their medicines in Ireland.

Multinational companies base their headquarters in Ireland due to its low corporate tax rate of 12.5%, business-friendly regulations and access to the European Union market.

Major American corporations such as Apple, Google, Facebook, Microsoft, Pfizer, and Intel have established their European or international headquarters there in order to take advantage of tax incentives, a skilled workforce, and favorable intellectual property laws.

While Ireland’s tax policies have faced scrutiny, the country remains an attractive destination for global businesses due to its stable economy and strategic location.

Nigeria seems to be gaining from Trump’s trade war policies looming with uncertainties, as investors are looking for cover from global volatility, flocking to developing economies. Nigeria’s foreign portfolio investments have risen in recent months with investors betting on the performance of the naira which has risen 7 % against the dollar since November’s U.S. elections, with the high yields on the Nigerian domestic Bond market rallying investors are also confident on the Naira, which is among the top performing currencies.

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