KPMG reduces US consulting business and adjusts audit partner scale
KPMG recently announced it will cut about 4% of its US consulting workforce (approximately 400 people) and plans to separate 10% of its US audit partners (approximately 100 people) through layoffs or voluntary early retirement. The firm also confirmed it will orderly exit its US federal audit business, affecting about 450 professionals. This move reflects a decline in some consulting demand due to changes in the regulatory environment, while demand for AI and cybersecurity-related consulting remains strong.
Key Points
- KPMG informed employees this week that it will cut approximately 4% of its U.S. consulting business workforce, or about 400 people. According to sources familiar with the matter, the previous week, the company had told employees that about 10% of its U.S. audit partners (about 100 people) would "leave the firm" through layoffs or voluntary early retirement.
- In an emailed statement to CFO Dive on Friday, KPMG confirmed that it will exit its U.S. federal audit practice through an "orderly, multi-year process, fulfilling all client and regulatory obligations," and will redeploy professionals from that practice to other areas of the firm. According to sources familiar with the matter, approximately 450 professionals will be affected by this exit from the government practice.
- "All three of KPMG's businesses are growing," KPMG said in the statement. "We will remain highly agile, taking strategic and decisive actions to best deploy our talent and capital to drive innovation and serve our clients." The firm has approximately 276,000 employees globally, including about 35,000 in the U.S., with operations divided into three segments: consulting, audit and assurance, and tax.
In-Depth Analysis
The backdrop to these changes is a decline in demand for some consulting services in financial services and other areas due to recent changes in the regulatory environment. Meanwhile, demand for consulting in artificial intelligence and cybersecurity from technology and telecommunications companies remains strong, according to sources familiar with the matter.
KPMG also emphasized the continued strength of its audit practice in the statement: "Our audit practice is performing strongly, and this action reflects our ongoing commitment to maintaining audit quality and leading the future of the profession. The action is related to a multi-year strategy aimed at aligning team size, structure, and skills with the capabilities of the audit platform to better serve clients and protect the capital markets."
A KPMG spokesperson declined to comment further beyond the statement.
KPMG is not the only firm in the industry to make cuts. Last month, The Wall Street Journal reported that accounting firm Forvis Mazars laid off approximately 3% of its U.S. audit and tax staff. Last year, Business Insider reported that PricewaterhouseCoopers planned to reduce hiring for tax and assurance associate roles aimed at recent college graduates.
Although not all employees at the Big Four accounting firms are CPAs or accountants, KPMG's audit layoffs are the latest sign that the accounting labor shortage is beginning to ease. This shortage has been particularly acute at small and mid-sized firms and has also troubled some CFOs who struggle to fill their finance teams. However, outsourced labor and the increasing adoption of automation and artificial intelligence, which enable smaller finance teams to complete work faster, are reshaping the accounting labor landscape, as CFO Dive has previously reported.
The Financial Times earlier reported that KPMG is closing its U.S. federal government audit practice and cutting audit staff after losing a $60 million Pentagon contract. The Wall Street Journal also earlier reported on the layoffs in the consulting practice.