KPMG Cuts UK Jobs As Big Four Struggle

KPMG is preparing to cut close to 600 jobs in the UK, underscoring mounting pressure across the Big Four accountancy firms as they grapple with a prolonged slowdown in consulting demand and shifting client priorities.

The firm told staff on a hastily arranged call that around 440 assistant manager roles in its audit division are at risk, according to people familiar with the matter. In total, roughly 590 positions within audit could be affected as KPMG attempts to reduce costs in areas where staffing levels have outpaced demand.

Separately, the group has outlined plans to cut around 120 roles in its advisory business, with hundreds more under review. Most of the reductions are expected to fall within the enterprise risk team, which advises clients on governance, risk and compliance. Some back-office staff and employees within an economics unit are also likely to be affected.

Taken together, the cuts highlight the scale of the challenge facing not just KPMG but the wider Big Four as they attempt to recalibrate after a sharp reversal in market conditions. Demand for consulting services surged during the pandemic, driven by corporate transformation projects, digital investment and government support programmes. That wave has since receded, leaving firms with excess capacity and weaker pipelines.

For many within the industry, the latest round of redundancies feels like a continuation of a cycle that began last year. “Last week was pretty devastating for everyone,” said one person familiar with the advisory cuts, noting that some employees are now facing redundancy processes for a second time in as many years.

At the heart of the issue is a mismatch between staffing levels and client demand. During the boom years, firms expanded rapidly, hiring consultants, auditors and specialists to meet a surge in work. As activity has slowed, those expanded teams have become harder to sustain.

“We’ve had a large bench for about six months and not much in the pipeline,” said another person familiar with the situation, referring to consultants who are not currently assigned to client projects. “We have also lost some fairly regular income projects.”

The concept of the “bench” has become a growing concern across the sector. High numbers of unassigned staff not only weigh on margins but also signal a lack of visibility on future work. For firms built on utilisation rates, where profitability depends heavily on keeping employees billable, prolonged periods of inactivity are difficult to absorb.

KPMG has pointed to unusually low attrition as one of the drivers behind the audit cuts. In a statement, the firm said that fewer employees than expected had left certain parts of the business, leading to a build-up of staff at junior and mid levels.

“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,” the firm said. “This isn’t a decision we take lightly, and we will support our people throughout this consultation.”

Low attrition may appear counterintuitive in a period of job cuts, but it reflects broader uncertainty in the labour market. Employees are less willing to move roles when opportunities are limited, particularly in sectors undergoing restructuring. Within audit, the issue is compounded by visa constraints affecting some international staff, who may find it harder to switch employers.

The decision to cut roles in audit also marks a notable shift. Historically, audit has been seen as a more stable line of business for the Big Four, underpinned by regulatory requirements and recurring client relationships. Previous rounds of redundancies have tended to focus more heavily on consulting and advisory functions, where demand is more cyclical.

That stability is now being tested. While audit revenues remain relatively steady, the combination of low attrition and changing demand patterns has led to an oversupply of junior auditors in some areas. Rival firms have faced similar pressures. PwC, for example, cut 175 junior audit roles last year, signalling that the issue is not confined to one firm.

Across the Big Four, the consulting slowdown has been more pronounced. According to Source Global Research, the UK consulting market grew by less than 4 per cent last year, a sharp deceleration from the double-digit growth seen during the pandemic period. Although the Management Consultancies Association expects growth to recover to around 6 per cent in 2026, the near-term outlook remains subdued.

KPMG’s own advisory business contracted by 3 per cent over the past year, mirroring declines at the consulting arms of EY, PwC and Deloitte. The slowdown reflects a combination of factors, including reduced corporate spending, delayed projects and greater scrutiny of discretionary budgets.

Clients are also reassessing their needs in light of rapid advances in artificial intelligence. While AI presents new opportunities for consulting firms, it is also prompting companies to rethink the scope and scale of external advice. In some cases, work that would previously have been outsourced is being brought in-house or automated.

This shift is forcing professional services firms to adapt their own operating models. They must invest in new capabilities while managing costs, a balance that is proving difficult in a weaker market.

KPMG’s leadership has already taken steps to shore up profitability. Under UK chief executive Jonathan Holt, the firm has implemented a series of cost-control measures, including pay freezes, reduced promotions and a smaller equity partner pool. The number of partners sharing profits has been cut to its lowest level in two decades.

These measures have had a tangible impact on financial performance. The firm reported a 14 per cent increase in profit before tax to £576 million in the year to September, driven in part by what it described as “careful cost management in response to the economic cycle”.

Partner pay has also risen. Average distributions reached £880,000 over the same period, an increase of 11 per cent and, for the first time in more than a decade, ahead of rival firms including PwC and EY.

Yet those gains have come alongside growing internal pressure to meet budgets. Senior leaders are said to be increasingly focused on cost discipline as revenue growth slows, a dynamic that has contributed to the latest round of job cuts.

The broader picture is one of an industry in transition. The Big Four expanded rapidly during a period of exceptional demand, but are now being forced to adjust to a more normalised, and in some areas weaker, market environment.

At the same time, they face structural challenges that go beyond the immediate economic cycle. The rise of AI is reshaping both client demand and internal processes, requiring significant investment and organisational change. Regulatory scrutiny remains high, particularly in audit, where questions around quality and independence continue to dominate.

Competition is also intensifying. Mid-tier firms are seeking to move up the value chain, while specialist consultancies and technology companies are encroaching on areas traditionally dominated by the Big Four. In this context, maintaining margins while investing for the future is a delicate balancing act.

For employees, the impact is immediate and personal. Redundancies, even when framed as strategic adjustments, can erode morale and create uncertainty across organisations. The fact that some staff are experiencing repeated rounds of cuts highlights the depth of the current adjustment.

For clients, the implications are more nuanced. While cost-cutting may improve short-term profitability, there is a risk that sustained reductions in headcount could affect capacity and service quality, particularly if demand rebounds more quickly than expected.

KPMG has sought to emphasise that it continues to see growth in certain areas and that the changes are part of a broader effort to align its business with evolving client needs.

“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,” it said.

That message reflects a wider narrative across the Big Four. Each firm is attempting to position itself for the next phase of growth, even as it navigates a challenging present.

Whether the current round of cuts will be sufficient remains uncertain. Much will depend on the trajectory of the consulting market, the pace of AI adoption and the broader economic environment. A modest recovery in demand could ease pressure, but a prolonged slowdown would likely prompt further restructuring.

For now, the latest developments at KPMG serve as a clear indication that the adjustment is still under way. The Big Four are not immune to the forces reshaping the professional services sector, and their response will help define the industry’s direction in the years ahead.