KPMG to axe 5% of US workforce as demand for services slows

KPMG is cutting 5 per cent of its workforce in the US, its second round of job cuts this year, as it struggles with the slowdown in demand for consulting and other services.

The firm, which was the first of the Big Four to axe staff in February, said in an email to staff seen by the Financial Times that continuing “economic headwinds” meant additional reductions were now needed.

While the 2 per cent cut in February was confined to staff in KPMG’s advisory business, the larger reductions announced internally on Monday will affect all areas of the firm, including its audit business. About 1,950 people will be affected, based on KPMG’s workforce of 39,000.

“While our pipeline of opportunities is strong and we continue to win in the marketplace, we are experiencing economic headwinds that are not unique to our business or firm,” KPMG US chief executive Paul Knopp wrote in the email to staff.

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Coupled with a sharp drop in the number of staff leaving the firm voluntarily, Knopp said, KPMG was facing “a significant mismatch between the size of our workforce and the measure of resources that will be needed to deliver services in the coming year”.

US consulting firms have taken the axe to staffing numbers this year after several years of breakneck hiring.

EY is dismissing 5 per cent of its staff, while Deloitte internally announced cuts of 1.5 per cent.

McKinsey announced a back-office restructuring that would cut up to 2,000 of its workforce of 45,000, while Accenture is conducting an 18-month programme of cuts totalling 2.6 per cent of its staff.

While the consulting industry is continuing to grow overall, surveys show pockets of the industry where demand has slumped, not least related to mergers and acquisitions activity.

Accenture last week said clients were rethinking small projects, and a report earlier this month by Source Global Research suggested there was growing pressure on fees and a wider rethink of when to use consultants.

More than three-quarters of professional services buyers had cancelled at least some existing projects or scrapped new ones, Source Global found, while two-thirds had paused most existing project work.

KPMG said the latest round of job cuts would be enacted between now and the end of its financial year in September.

Staff in the audit and tax practices would find out if they are affected later on Monday, according to Knopp’s email, while advisory staff would be notified later in the summer. – Copyright The Financial Times Limited 2023