Accenture shares have fallen 7.26% to US$300.91 after the consulting firm warned that tightening US government spending is weighing on its federal revenues. The stock is now down 12.79% over the past year and has dropped 22.9% in the past month alone.
Accenture is a global professional services company that provides consulting, technology, and outsourcing services to government agencies and major corporations. It employs nearly 800,000 people worldwide and is one of the largest consulting firms in the United States federal contracting space.
Speaking on a fiscal second-quarter earnings call, Chief Executive Julie Sweet said new procurement activity had slowed under the Trump administration’s Department of Government Efficiency (DOGE), an initiative led by Elon Musk to reduce federal agency spending and consolidate office space.
“Federal represented approximately 8% of our global revenue and 16% of our Americas revenue in FY 2024,” Sweet said. “During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue.”
Accenture said its US Federal Services division had lost contracts following agency reviews. Sweet said the slowdown was affecting new bookings and warned of “elevated uncertainty” in the broader economic and geopolitical environment.
Accenture is one of the first major consulting firms to be affected by the DOGE initiative, which has directed agencies to reassess their top 10 consulting contracts and cancel those deemed non-essential. According to Bloomberg, the US General Services Administration has already terminated 1,700 consulting contracts, citing US$4.5bn in savings.
“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,” Sweet said.
Despite the headwinds, Accenture posted better-than-expected earnings, reporting US$2.82 per share on revenue of US$16.66bn, ahead of consensus estimates of US$2.81 and US$16.62bn respectively. However, investor concern over future revenue streams from federal work outweighed the positive result.
The sell-off extended to other firms exposed to US government contracts. Shares of Booz Allen Hamilton dropped 8.1% on Thursday in response.
IBM, which has an estimated 10–15% of its revenue tied to public sector clients, also saw its shares fall 3.56% to US$242.32. The stock had been one of the stronger performers among large-cap tech companies in 2025, and is still up 10.7% year to date and 26.8% over the past 12 months.
Analysts noted that IBM’s Consulting division could face similar pressures if DOGE-driven contract reviews continue across the sector. “Accenture’s updates on federal government spending headwinds and elevated macro uncertainty bode negatively for IBM’s Consulting segment,” Evercore ISI analyst Amit Daryanani wrote. He warned that the situation could dampen hopes for a second-half recovery in IBM’s consulting business.
IBM’s consulting revenue had already fallen 2% in the December quarter—one of the few weak points in an otherwise well-received earnings report. Shares had rallied sharply in late 2023 and early 2024, buoyed by investor enthusiasm for the company’s enterprise-focused AI offerings.
Thursday’s fall saw IBM break below its 50-day moving average in heavy volume and dip beneath a previous buy point of US$239.35 set in December. Still, the stock remains one of the few large-cap tech names trading in positive territory for the year.
Accenture, by contrast, has now underperformed most of its peers year to date, with the outlook for federal services clouding an otherwise solid quarter.
