Shares of Accenture plunged 7.3% on Thursday after the consulting giant reported that tightened U.S. federal spending is weighing on its revenue.

The company's Federal Services division has lost key contracts following recent government reviews, Chief Executive Julie Spellman Sweet disclosed during the fiscal second-quarter earnings call.

"Federal represented approximately 8% of our global revenue and 16% of our Americas revenue in FY 2024," Sweet stated. "The new administration is focused on running the government more efficiently, which has slowed many procurement actions, negatively impacting our sales and revenue."

Accenture Among First to Feel the Impact of DOGE

Accenture is one of the first corporate casualties of the Trump administration's Department of Government Efficiency (DOGE)-a controversial initiative led by billionaire Elon Musk to downsize federal agencies and consolidate office spaces.

The US General Services Administration (GSA) has also instructed federal agencies to review contracts with the top 10 highest-paid consulting firms and terminate non-essential agreements.

"While we continue to believe our federal work is mission-critical, we anticipate ongoing uncertainty as government priorities evolve," Sweet added.

Market Reacts Despite Strong Earnings

Despite reporting better-than-expected earnings of $2.82 per share on $16.66 billion revenue, Accenture's stock fell sharply as investor concerns over reduced government spending took precedence.

Accenture's stock has now dropped 22.9% in the past month, bringing its year-to-date decline to 14.5%. The broader consulting sector also took a hit, with Booz Allen Hamilton shares slipping 8.1%.