KPMG is set to lay off more than 500 staff in the UK, with the cuts set to focus heavily on its audit business. As the Big Four firm looks to balance its headcount, a number of outlets have pointed to the redundancies as a sign of things to come for the sector, with AI taking on more junior roles – but the reality may not be so clean-cut.
Amid the UK consulting sector’s continued downturn, the largest entities in the sector have consistently been looking for ways to preserve their profitability. And increasingly, this is culminating in reports of job cuts, across the Big Four of Deloitte, PwC, EY and KPMG.
The latest such announcement to grab headlines comes from KPMG, where consultancy bosses reportedly told staff that some 440 assistant manager roles in the audit business would be cut. As published by Bloomberg, it was also said that 120 roles across the advisory arm would be axed.
A statement from KPMG’s UK wing confirmed, “In our audit business, alongside hiring for growth, we expect to see a regular pattern of natural attrition. But current market conditions mean our attrition rates are very low within certain parts of our audit population, which is why we are proposing to right-size those areas. This isn’t a decision we take lightly, and we will support our people throughout this consultation.”
A follow-up article from The Sunday Times noted that people working across public sector work would not be affected – but that the move aimed to address a fall in revenue across auditing. And as assistant managers in auditing are relatively junior positions, in which qualifications in accounting were secured three years ago, these are areas where pay-outs are likely to be lower.
The cuts could affect around one in 20 auditing jobs, and one in 50 advisory jobs. Speaking to the Financial Times (which also reported that KPMG has said that it will slash 2% of its employees in the US), one insider called the cuts to KPMG’s advisory business “pretty devastating”. Elsewhere, senior executives said they were worried about the pipeline of talent at the firm – something which has been a continued topic of discussion, as top consultancies downsize their junior headcount (for the sake of AI restructuring, or efficiency savings), leaving it unclear where the partners of tomorrow will come from, or obtain important experience in the business.
The AI apocalypse?
Amid reports of hundreds of layoffs across KPMG’s UK and US practices, commentators have suggested that the move is a sign of things to come, with the firm allegedly now favouring AI tools over junior staff. Not everyone is so convinced of that, though.
For example, commenting on the news via a LinkedIn post, UHY Hacker Young Partner Martin Jones contended, “The AI risk is overblown – KPMG, as they have always done in a downturn, is cutting staff due to simple economics. I don’t believe KPMG mentioned AI in their statement. AI may play some part in this, time will tell, but it’s principally lower demand for services and lower staff turnover – KPMG quoted that attrition rates have fallen sharply as clearly the opportunities outside of the profession are drying up, again due to the slowdown in the economy and cautious hiring”.
Looking back over the last decade might lend credence to this argument. When it comes to shoring up its bottom-line and maximising profits, KPMG has returned to its current tactic time and again – and without anyone citing automation as a motivating factor.
In more recent times, the wider Big Four all announced they would be trimming their headcount, having ‘over-hired’ during a post-lockdown boom in demand, which they wrongly anticipated would be a long-term trend. In 2024, it was reported that over a 12 month period, UK-based vacancies among the Big Four had fallen by 60%, as Deloitte, PwC, EY and KPMG as they sought to adjust their headcount accordingly – while insiders cited a growing sense of apprehension that significant job cuts might soon be on the horizon. This was confirmed – at least in the US – with rolling out plans that would impact about 4% of the firm’s roughly 9,000 auditing staff in the world’s largest consulting market.
A year earlier, KPMG – which was consolidating its deal advisory and consulting practices into a single division – also announced it would lay off 110 people in the deals wing, and 125 in consulting. The move came after the firm was stung with the largest fine ever issued by the Financial Reporting Council for its role in the demise of Carillion (years after partners had received a bumper payout, in spite of the scandal).
While those instances still came within the time-frame of the AI goldrush, which commenced after the public launch of ChatGPT in November 2022, tellingly there are also noted instances of KPMG shedding staff in the years immediately before the hype kicked off. In 2020, the firm was reported to be mooting the axe for as many as 200 of its UK employees. The firm was said to have suffered a slump in demand due to the coronavirus pandemic, and the recession which followed it.
A year earlier, meanwhile, reports showed KPMG was planning to cull both its UK partners, and admin staff. The Big Four firm had seen profits grow by 18% to £356 million in its last results, but amid scrutiny over its audit work for a series of high-profile accounting scandals, it commenced a restructuring campaign to sell off portions of its business, while up to 250 administrative support roles were also picked out for a cost-saving drive.
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