Attention FAE Customers:
Please be aware that NASBA credits are awarded based on whether the events are webcast or in-person, as well as on the number of CPE credits.
Please check the event registration page to see if NASBA credits are being awarded for the programs you select.

Post-Pandemic Circumstances Causing Large Firms to Cut Back on Consulting Staff

S.J. Steinhardt
Published Date:
Jul 19, 2023


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.

Click here to see more of the latest news from the NYSSCPA.