KPMG has confirmed it will make about 200 roles redundant in its UK advisory division over the coming weeks, citing “low levels of attrition” among the reasons for the cuts.
The reductions account for about 4 per cent of the firm’s UK advisory workforce and will affect all pay grades. A consultation to determine who will go is under way, with affected staff likely to depart next month.
A spokeswoman for KPMG said: “To respond to these market dynamics combined with low levels of attrition, we are proposing reductions in some of our advisory client-facing teams and will support our colleagues throughout this process.”
She said the firm was also acting “to make sure we have the right skills in place to best serve our clients”.
Client spending on consultants falls
The cuts come as corporate clients rein in their spending on consultants against a backdrop of trade wars, real wars, sluggish economic growth and persistent inflation.
Revenues in KPMG’s advisory business declined by 3 per cent in its most recent financial year. Deloitte, EY and PwC also reported contractions in their consulting businesses.
A few years ago, during the post-lockdown Great Resignation, the large accounting and consulting firms were competing to retain staff, but the backdrop has changed dramatically since then.
Firms in the sector would normally respond to a smaller pipeline of work by not replacing staff who leave. With hiring across the industry having slowed sharply, however, fewer people are resigning, and firms are instead making redundancies.
KPMG is not the only Big Four firm to point to staff turnover. This summer, Deloitte also blamed low attrition rates for its decision to cut about 175 roles from its UK workforce.
Recruitment at the entry level had already been scaled back. Business Matters reported last year that the Big Four had cut graduate hiring over two years, with KPMG making the steepest reduction, from 1,399 graduates to 942, a fall of 33 per cent.
Skills and artificial intelligence
It is widely accepted in the industry that the rapid adoption of artificial intelligence means the future workforce will need different skills, particularly softer skills.
The same Business Matters report noted that AI tools were automating tasks traditionally given to junior analysts, and that all four firms were increasing offshoring to countries including India, Malaysia and the Philippines.
Headcount and partner pay
KPMG employed more than 17,000 staff in the UK during the pandemic. That figure has fallen to about 15,800, and the firm has shed about 1,000 jobs so far this year.
Jon Holt, KPMG’s UK senior partner, has prioritised cost cutting to improve profitability and raise partner pay, which had lagged behind the firm’s rivals for many years.
Last year the average KPMG partner in the UK was paid £880,000. That meant KPMG partners received more than their counterparts at PwC and EY for the first time in more than a decade.
The latest round of redundancies adds to earlier reductions at the firm this year. The consultation now under way will determine which roles in the advisory client-facing teams are removed, with KPMG saying it will support colleagues throughout the process.
