July 19, 2024

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Layoff Watch ’24: KPMG Australia Throws Out Babies and Bath Water in Consulting

As we know, it’s been a rough year and a half or so for consulting. Things are so bad in the UK firms have been shedding staff left and right while Australia has been suffering with the one-two punch of slowed client demand and the continued fallout of the PwC tax scandal leading to lost clients, reputational damage, and continued tongue-lashings from parliament.

As a direct result of this unpleasant market, KPMG Australia is laying off another 200 people (on top of the 3 percent reduction of headcount last year) and completely changing up their consulting business. That means they’re going to start emulating Accenture, not McKinsey.

Reports Financial Review:

KPMG Australia will overhaul its consulting business to focus on tech-related advisory and software installation as part of an $80 million cost-cutting exercise that will include shedding about 200 jobs.

Consulting leader Paul Howes said the changes were being made in response to a “fundamental shift in that market” at a global level away from “legacy assessment and advice services”.

“I think the era of generalist management consulting being standalone is over, and that all consulting into the future will need to be tech-enabled,” Mr Howes told AFR Weekend, describing the year as a “bumpy” one for the firm.

All cuts will be at the senior consultant level and above. A fortunate 50-ish people will be spared from layoffs and will instead get reshuffled elsewhere in the firm.

On the topic of a troubled market, KPMG Australia reported total revenue of $2.55 billion AUD ($1.7 billion USD) for fiscal 2023, an increase of 9.1 percent from prior year. That figure includes $0.175 in recoverable expenses and actual revenue of $2.38 billion. At the time they released these numbers in August 2023, the firm talked about beginning to take hits in December of 2022 and CEO Andrew Yates said KPMG had to “adjust our business” in order to “reflect the new landscape.”

Revenue by service line (percentage change over 2022 in parentheses) for FY23 broke down to:

  • Audit, Assurance & Risk Consulting: $671 million (+4%)
  • Deals, Tax & Legal: $401 million (-2%)
  • Enterprise: $361 million (+23%)
  • Infrastructure, Assets & Places: $200 million (+22%)
  • Management Consulting: $745 million (+12%)

They’re hoping to make tech consulting about 60 percent of the consulting take going forward.

Added AFR’s story, Howes said part of this consulting transformation will include “looking at org design, understanding working behaviours … [and] organisational psychology in terms of the way in which you actually get different bits of quite a large sprawling company to talk to each other.” Hmm. Maybe some delayering too?

KPMG launches radical overhaul, cuts 200 senior jobs [Financial Review]