KPMG’s UK arm has told nearly 600 employees in its audit business that their roles are at risk, as the Big Four firm moves to cut costs in a tougher market.
The proposed shake-up is expected to lead to up to 440 exits if the redundancy process goes ahead.
The affected staff have been informed that they could be laid off, subject to a formal consultation, Bloomberg reported, citing a memo sent to employees and people familiar with the matter.
Up to 440 audit exits possible after consultation
According to Bloomberg, the proposed cuts are centred on assistant managers who are qualified accountants and affect roughly 6 per cent of KPMG UK’s 7,100-strong audit division.
KPMG UK confirmed on Saturday that it plans to reduce staff in its audit business, after Bloomberg first reported the potential scale of the move.
However, the firm did not specify how many jobs could ultimately be cut.
KPMG UK said the decision was being driven by unusually low staff turnover in parts of its audit practice.
“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,” a KPMG UK spokesperson said in a statement to Bloomberg.
“This isn’t a decision we take lightly.”
The consultation on the audit cuts is expected to run until mid-May, reported the Financial Times.
Advisory arm also facing fresh redundancies
According to The Financial Times, KPMG has also separately told staff in its advisory business that it plans to cut around 120 roles, while hundreds more could also be considered for possible redundancies.
Most of the advisory job losses are expected to fall in the enterprise risk division, which advises companies on governance, risk and compliance.
Some back-office roles and staff in an economics team are also said to be affected.
One person familiar with the advisory cuts told the FT that the latest round had been “pretty devastating”, especially for employees who had already been through similar disruption last year.
Another person was cited by FT as saying that senior leaders were under pressure to meet budgets during a prolonged slowdown, saying the firm had carried “a large bench” of unassigned consultants for around six months and had seen fewer projects in the pipeline.
A separate person said the changes would affect just over 2 per cent of the advisory business.
KPMG confirmed that it was “launching proposals to reduce roles in some areas” of its advisory arm.
“While the firm continues to experience growth in some areas, we are always looking at the shape of our business to stay in step with client demand and to support sustainable growth,” the firm said, as quoted by the FT.
Consulting slowdown and AI transition add pressure
The job cuts highlight the continuing strain across professional services firms, which have been trying to rein in costs after a sharp post-pandemic expansion and a subsequent slowdown in demand for consulting work.
Other major firms have also turned to layoffs. McKinsey & Co. has discussed cutting about 10 per cent of headcount in non-client-facing teams, potentially amounting to several thousand jobs over the next 18 to 24 months.
KPMG’s latest move comes as firms across the sector try to adjust to weaker client demand while also reshaping their operations for an AI-driven environment.
KPMG’s audit cuts are somewhat unusual because earlier Big Four redundancy rounds have generally been concentrated in consulting or support functions, given the more stable nature of audit work.
However, low attrition has swelled the number of junior staff, and PwC cut 175 junior auditors last year, the newspaper reported.
Profits rise despite weaker advisory performance
KPMG employs about 16,700 people in the UK.
While the firm does not break out staff numbers by division, the advisory arm accounts for close to half of annual sales.
According to the FT, KPMG’s advisory business shrank 3 per cent last year, in line with revenue declines at the consulting units of EY, PwC and Deloitte, even as the firm’s overall profitability improved.
KPMG’s profit before tax rose 14 per cent to £576 million last year, which the firm attributed to “careful cost management in response to the economic cycle”.
UK chief executive Jonathan Holt, who recently lost the race to become KPMG’s next global chief, has been boosting profitability through cost cuts, pay and promotion freezes, and lower headcount.
It added that UK partners received an average £880,000 for the 12 months to September, up 11 per cent, marking the first time in more than a decade that KPMG’s UK partners were paid more than those at PwC and EY.
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