Slower growth in the aftermath of the COVID-19
pandemic has caused three of the Big Four firms to lay off consultants, mostly
on the advisory side, The
Wall Street Journal reported.
The firms are cutting back after aggressive
hiring occasioned by demand for consulting in areas such as corporate strategy
during the pandemic, and lower attrition than had been expected during the
first half of the year.
KPMG laid off about 5 percent of its U.S.
staff in June, four months after cutting some advisory personnel, nearly 2
percent of U.S. staff. In April, Deloitte cut 1.5 percent of its U.S. staff, and
EY cut 5 percent of its U.S. staff. Outside the Big Four, Grant Thornton let
go 3 percent of its U.S. staff in May.
PwC, which said that its U.S. unit has not had
layoffs and that no layoffs are planned, also said that it expects to report an
increase this year in its global workforce from the nearly 328,000 it reported
last year.
Voluntary and involuntary departures generally climbed
at the Big Four firms each year since at least 2019, according to workplace
data provider Revelio Labs. Its data also showed that roughly 56,600 people
collectively left the firms in 2022, up by 8.3 percent from a year earlier. This
year, exits at the four big firms have fallen by 11.6 percent through June from
the year-earlier period, to about 21,400 in the United States, according to Revelio.
“Life became more flexible and folks have found
reasons to stay where they might have been ground to a fine powder prior years,”
Texas A&M University accounting professor Michael Shaub told the Journal, referring
to remote work and salary increases that might have kept some from resigning
this year. “Now the firms are saying we can’t keep all these people.”
“Client demand isn’t shrinking, but it’s
certainly changing shape, so they need more experts in one field and need fewer
in another,” Fiona Czerniawska, chief executive of consulting-industry analyst
Source Global Research, told the Journal. Clients are still working with
consultants to enhance their tech capabilities, but they have slowed their mergers-and-acquisitions
activity and need for related support such as due diligence, according to the
Journal.
Czerniawska said that U.S. and global
consulting is expected to experience much lower growth through 2025 than in the
boom times of 2021 and early 2022.
Balancing supply and demand in consulting firms
is particularly difficult when clients’ needs are changing quickly and
unpredictably, she said, adding that “[i]f you promote and then you realize you need to
make people redundant, that doesn’t sound like a great way of doing it, but
some firms are clearly taking that approach. Everybody tries to manage this in
a low-key way, because of the reputational damage of taking out too many people
too publicly.”
Additionally, she said, “Firms don’t have much choice
except to lay people off from one area when they might be recruiting in another
because the services they’re delivering are becoming more specialized."
U.S. job postings at KPMG, Deloitte and EY across
all business lines dropped by 76 percent in July, compared with a year earlier, investment
bank William Blair & Co. said.