As KPMG looks to cut hundreds of staff, expect more layoffs at the Big Four
The Big Four giants, after hitting pandemic-era highs, are currently navigating a perfect storm of challenges: a harsher market, a surge in AI investment and a stagnant economy. These pressures are forcing firms to take a pair of shears to their workforces as the industry’s traditional “attrition model” fails to keep pace with reality.
Over the weekend, news broke of yet another redundancy round at one of the Big Four firms, this time at KPMG, as it seeks to cut around 600 jobs in the UK. The firm is set to axe about 440 ‘assistant manager’ roles in the firm’s audit business, along with around 120 roles in its advisory arm, also set for the chopping block.
In its latest results, which included KPMG Switzerland as part of its new combination, KPMG’s audit business grew by 5 per cent, but its advisory business saw a 3 per cent decrease in fees.
KPMG is not alone: over the last three years, job losses at PwC, EY and Deloitte have mounted, as thousands of jobs were cut in the UK, revenue stalled, and AI automation continued to dominate the business agenda.
Over 900 roles were made redundant at the UK Big Four firms in 2024, and some 1,800 jobs were cut in 2023, with even more expected this year.
PwC UK’s most recent financials showed that its consulting and risk practices both declined by 3 per cent, a similar situation to its competitor, EY UK, whose consulting revenues decreased by 6 per cent.
The firms are all facing a range of issues that challenge their traditional model. As James Ransome, head of consulting at Patrick Morgan, explained, “There’s a demand slowdown, but also structural pressure: fee compression (especially in audit/compliance), AI reducing delivery effort, and a shift toward outcome-based pricing. That’s putting sustained pressure on margins.”
Attrition model under the scope
Yet another problem facing the firms is the pressure that a slowing economy and poor jobs market is having on their attrition model. Simply put, people in jobs are opting to stay put.
KPMG blamed low attrition rates for this latest redundancy round, to which Ransome said, “KPMG calling this out directly is quite telling.”
Fiona Czerniawska, CEO, Source Global Research, said: “Historically, the Big Four and other professional services firms have been able to rely on attrition as employee churn has been relatively high: Typically 15-20 per cent per annum, and more when the market is growing fast, and firms are keen to poach the best talent.”
However, as the UK unemployment rate rose to over 5 per cent, people are holding onto their jobs as long as they can. Even as bonuses and pay rises dry up at certain firms, the job hoppers are staying put.
This is now forcing the firms, especially the Big Four, to take matters into their own hands, adding to the reasons for redundancies.
“Bottom line: Low attrition hasn’t caused the issue; it’s exposed a model that’s already under pressure from both market conditions and structural change,” Ransome added.
But as unemployment in the UK is predicted to reach pandemic levels and the British economy experiences subdued growth, the cuts aren’t set to halt just yet.