Major consultancies cut staff, slash spending as market slows

afr.com:

Big four consulting firm KPMG has cut another 100 staff after making 200 redundant in February, rival Deloitte has cut dozens, and 78 staff at PwC face an uncertain future after their planned move to spin-off Scyne was scrapped.

A widespread slowdown in public and private sector demand this financial year has also led to the firms, including EY and Accenture, taking a variety of measures designed to reduce or defer costs, such as “performance managing” underachieving personnel. The five major firms are also, variously, cutting back on recruitment, cracking down on expenses and travel costs, and deferring graduate start dates.

The five major consulting firms are all feeling the pinch from government cutbacks and a fall in M&A activity. 

The use of consultants by federal and state governments has fallen off a cliff since the extent of the PwC tax leaks scandal was revealed in May. At the same time, federal Labor has made increasingly aggressive moves to cut use of consultants and contractors as part of its policy to bring skills back into the public service.

The public sector market will only get more difficult for firms after the Department of Finance on Monday effectively banned the use of external hires for core work and leadership positions across the Commonwealth.

Meanwhile, the economic slowdown, higher interest rates and a fall in M&A activity have all led to private sector clients deferring or delaying their use of advisers to help with ongoing and new projects.

Insiders said that consultants not working on projects linked to major technology-driven transformations and regular accounting, tax and auditing work for the big four firms were most at risk of being left idle. Other areas still experiencing strong demand