KPMG Australia to cut $80m in costs and flags job losses as it reshapes consulting business

The major accounting firm has told staff that it needs to cut $80m in costs and make hundreds of consultants redundant to meet changing demand from clients.

KPMG national managing partner Paul Howes says the firm needs to transform to meet changing demands from clients. Picture: Britta Campion

KPMG Australia will undertake a major restructure to reshape and simplify its consulting business as part of an $80m cost cutting program that will make as many as 200 jobs redundant amid a slowdown in demand for consultants.

The firm broke the news to staff on Friday that the restructure was vital to meeting the needs of its clients who are expecting KPMG to leverage technology to transform their businesses at a much faster pace.

The transformation is expected to realise additional savings of around $80m (annualised), which will be reinvested in digital solutions, alliances, industry expertise and new delivery methods – allowing the business to grow differently and match genuine market demand.

A total of 250 jobs, making up 6 per cent of the firm’s 4000 advisory staff, will be impacted by the changes, with some to land roles in other parts of KPMG, or other member firms in the region

KPMG national managing partner Paul Howes told The Weekend Australian that it was expected that about 200 roles would be redundant with numbers to be finalised by June 21.

“It’s regrettable, and it’ll be sad to see those team members depart the firm, but it is the right thing in terms of the transformation that our business needs to be ahead of the game in where the market is shifting to,” he said.

“This is being driven by market dynamics, some of which we control, some we don’t. But my obligation is to make sure that we have the right approach to the business going forward.”

Changes at KPMG Australia will see 250 roles impacted with about 200 redundancies expected. (Photo by Sean Gallup/Getty Images)

The cuts will target those in the role of senior consultant and above, while impacts to partners are being managed in a different process.

Mr Howes, who was national secretary of The Australian Workers’ Union for seven years until 2014, said consulting businesses needed to evolve to meet changing demands.

Under the changes KPMG has set a goal to have 60 per cent of its business focused on transformation and implementation of technology systems, while 30 per cent would focus on assessment and advice compared to 60 per cent today and 10 per cent on managed services.

“The old way of just having these stand-alone management consulting capabilities is gone, and we are now moving into a new evolution where you have technology being caught on all that work.”

“Our assessment and advice business will remain a very large component of what we do, but emphasis in terms of growth will be on transformation and implementation capability

KPMG will look to rationalise services under the plan with sectors to better reflect market needs and articulate the offerings KPMG delivers to its clients. It will also break down existing silos to bring the right capabilities to deliver value for clients.

Impending job losses come amid a challenging time for the border consulting sector in the past 18 months which has been impacted by a slowdown in demand as a result of the broader economic slowdown after a flurry of activity during the pandemic.

The past few months has seen PwC Australia make 329 roles redundant, mostly from its consulting arm, EY moved to cut more than 100 roles and Deloitte announced plans to streamline its business into four operating units.

“We are not immune from this (slowdown) as well, but the reason why we are making these changes is to make sure that we are in the fittest position possible to take advantage of that rebound when it occurs,” Mr Howes said.

He said that in the past year it has become clear that there is a shift in the consulting market and had worked with his international counterparts, who have made similar pivots, to identify emerging opportunities and what changes need to be made.

KPMG is the latest major consulting firm to announce changes to combat a slowdown in demand for consulting services.

“We are seeing a global shift in the developed work around what our clients want,” he said.

“They expect us to have the skills to provide and give them advice ahead of the curve, but importantly the skill base to implement and transform their businesses through the world’s most cutting edge technologies..”

The pivot comes after a Senate committee probing consulting firms following the PwC tax scandal released its recommendations including tighter scrutiny for government contracts and tougher guidelines for conflicts and tighter transparency measures.

Mr Howes said all the recommendations announced had some merit and would welcome greater regulation of the sector.

“I’ve always thought greater regulation and greater transparency in our industry is a positive thing, and we generally welcome that,” he said.

“There’s nothing wrong with the greater scrutiny on the way in which we operate because it will hold us to a higher standard and that is what I want our people to do.”

Deloitte, EY, KPMG and PwC have gone all in on emerging technologies such as generative AI in past year, investing billions of dollars which has resulted in the rollout of custom-built virtual assistants similar to ChatGPT other systems designed to turn work around quicker.

Originally published as KPMG Australia to cut $80m in costs and flags job losses as it reshapes consulting business