Elon Musk’s DOGE Impact on Accenture and the Global IT Sector: Analyzing the Ripple Effects

Introduction

Elon Musk’s Department of Government Efficiency (DOGE) leadership is creating significant waves across the consulting and IT industry landscape, with Accenture being the first major casualty.

The cost-cutting initiative prompts concerns among US and Indian IT firms, though with varying degrees of exposure and vulnerability. This analysis examines what we know about DOGE’s impact and implications for the global IT sector.

The Department of Government Efficiency

Musk’s Cost-Cutting Mission

The Department of Government Efficiency (DOGE) was established by President Trump through an executive order on January 20, 2025, and is co-led by Elon Musk and Vivek Ramaswamy.

This initiative aims to streamline federal operations, reduce government waste, and slash unnecessary spending.

DOGE has been mainly focused on auditing consulting contracts with the federal government, resulting in the termination of numerous agreements deemed non-essential.

Musk’s approach to efficiency is characterized by his “slash first, fix later” philosophy, which he has implemented across his companies, including Tesla, SpaceX, and X (formerly Twitter).

This strategy involves cutting deeply—often preferring to cut too much rather than too little—and dealing with the consequences afterward. While this has proven effective in his businesses, implementing such tactics in the federal government presents unique challenges due to the complex legal frameworks and processes governing government operations.

Musk’s Cost-Cutting History

Musk has built a reputation as a relentless cost-cutter throughout his entrepreneurial career. At Twitter, he reduced the workforce by approximately 80%, eliminated janitorial services, and even personally unplugged servers to expedite the shutdown of a data center to avoid paying rent.

At Tesla, he cut 10% of the workforce, emphasizing the need for the company to be “absolutely hardcore about headcount and cost reduction.”

His consistent focus on eliminating unnecessary expenses has generally yielded positive results for his companies despite occasional service disruptions and quality concerns.

Accenture

The First Major DOGE Casualty

Accenture has emerged as the first major corporate casualty of DOGE’s cost-cutting initiatives.

On March 20, 2025, the consulting giant’s stock plummeted 7% after CEO Julie Sweet acknowledged during an earnings call that DOGE’s efforts negatively impacted the company’s financial performance.

“As you know, the new administration is focused on running the government more efficiently, which has slowed many procurement actions, negatively impacting our sales and revenue,” Sweet stated during the earnings call.

She revealed that federal government contracts represented approximately 8% of Accenture’s global revenue ($1.33 billion out of $16.7 billion) for the quarter ending February 28.

The impact has been substantial, with a “terminated for convenience” contract that could have generated additional millions by 2027 being canceled.

This cancellation marked the tenth contract lost by Accenture due to the new regulations implemented during the Trump administration.

Effects on Other US Consulting Firms

Accenture is not alone in feeling DOGE’s impact. Other major consulting firms with significant federal contracts are also experiencing negative consequences:

Booz Allen Hamilton saw its stock fall by 8% following Accenture’s announcement

IBM’s stock dropped by 4%, contributing to an overall decline of over 8% in the past month

Deloitte, though privately owned, is also reportedly under scrutiny along with other top consulting firms

The General Services Administration has mandated that agencies provide clear justifications for the value and necessity of consulting contracts, with inadequately justified contracts facing termination.

This policy shift represents a fundamental change in how the federal government approaches its relationships with consulting partners.

Impact on Indian IT Companies

The effects of DOGE’s cost-cutting measures on Indian IT firms are more nuanced, with immediate and potential long-term implications.

Immediate Market Reaction

The Indian IT sector experienced significant market turbulence in 2025, with the IT index declining 15.3% this year—marking its worst quarter since June 2022. Major companies have seen substantial stock price reductions:

TCS, Wipro, Infosys, and HCL Tech have experienced share price declines ranging from 11.2% to 18.1%

The broader pessimistic outlook suggests that expected improvements may not materialize even in FY 2026

Limited Direct Exposure to Federal Contracts

Despite the market reaction, Indian IT firms may face less direct impact from DOGE’s federal contract terminations compared to their American counterparts:

The Indian IT services industry represents less than 2% of annual US federal spending

The $280+ billion Indian IT sector has less than $6 billion in exposure to US federal contracts

Many Indian IT firms work primarily with local and state governments rather than federal agencies, potentially insulating them from DOGE’s immediate jurisdiction

As Prashant Shukla, vice president of Everest Group, noted, “In cases where Indian service providers have direct exposure to federal contracts, protective contractual clauses might require the US government to establish a special case for termination, such as termination for cause.”

Secondary Impact Through Global IT Ecosystem

While direct exposure may be limited, Indian IT companies face secondary effects through their interconnections with global consulting firms and the broader economic uncertainty generated by DOGE’s initiatives:

Accenture’s quarterly report, showing weakness in discretionary spending and aggregate demand, is considered a leading indicator for the Indian IT industry

Recent uncertainty and trade tensions in the US market, which is crucial for Indian IT companies, have increased concerns about the first half of FY 2026

Projects that once flowed steadily to Indian IT firms are reportedly slowing down or being canceled altogether

Broader Implications for the IT Services Industry

DOGE’s impact extends beyond immediate contract terminations, potentially reshaping the consulting and IT services landscape in several ways:

Shift in Spending Priorities

The federal government’s new approach to consulting contracts is forcing both US and Indian IT firms to recalibrate their strategies:

There’s greater emphasis on demonstrating clear value and necessity for projects

Companies are adopting a “wait and watch” policy due to heightened uncertainty, potentially delaying discretionary IT spending

Some sectors like banking, financial services, and healthcare had shown signs of improvement before DOGE’s initiatives created new uncertainties

Adaptation Strategies

IT firms are developing various approaches to navigate the changing landscape:

Some Accenture employees are reportedly seeking to transfer from federal to commercial divisions, though opportunities are limited

Indian IT companies are likely to diversify their client base to reduce dependency on US federal contracts

Firms may need to focus more on cost-efficiency solutions that align with DOGE’s mission of enhancing government efficiency

As Julie Sweet optimistically noted, despite current challenges: “We see significant opportunities over time to assist in consolidating, modernizing, and reinventing the federal government to achieve a new level of efficiency.”

Challenges and Limitations to DOGE’s Impact

Despite its ambitious goals, DOGE faces several challenges that may limit its long-term impact:

Internal Resistance

DOGE is encountering pushback from within the government:

Multiple federal agencies have instructed employees not to respond immediately to specific demands from Musk

The American Federation of Government Employees has questioned Musk’s authority to fire employees who do not respond to his directives

Some government officials appointed by Trump have challenged aspects of DOGE’s authority

Public and Congressional Concerns

There’s growing skepticism about DOGE’s approach:

A Reuters/Ipsos poll found that 58% of Americans worry that Musk’s campaign could delay federal programs

71% of respondents agreed that the very wealthy have too much influence on the White House

Even some Republican lawmakers have expressed concerns about DOGE’s methods, with Senator John Curtis of Utah calling for “a dose of compassion” in the process

Conclusion

Elon Musk’s DOGE initiative represents a significant shift in the US government’s consulting and IT services procurement approach. Accenture is the first significant corporate entity to acknowledge its impact publicly.

While US consulting giants with substantial federal contracts face immediate challenges, Indian IT firms may experience more limited direct effects but remain vulnerable to broader industry uncertainties.

The situation continues to evolve, with resistance to and support for DOGE’s mission emerging from various quarters.

For IT firms globally, this period demands strategic flexibility, diversification, and reevaluating how they demonstrate value to government clients.

As the full implications of DOGE’s cost-cutting measures unfold, the global IT services landscape may transform substantially, requiring companies to adapt to a new paradigm of government spending and efficiency expectations.