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The past week has been a microcosm of what’s happening in professional services, as seen through recent workforce reductions at KPMG and Forvis Mazars. As we report exclusively, the Big Four accounting firm KPMG is laying off about 4% of its U.S. advisory business.
The WSJ Leadership Institute’s Mark Maurer has the goods, and reports that KPMG is trimming consultants who specialize in regulatory risk advisory, customer operations and financial services, people familiar with the matter said.
Why? Reflecting some trends in the wider profession, both KPMG and Forvis Mazars are undoing some of the overhiring from the pandemic era—and also trying to address lower attrition rates that companies had expected.
I asked Mark to provide a bit more insight into these trends. Here are edited excerpts from our conversation:
WSJLI: Some of your stories from this week mentioned firms like KPMG and Forvis Mazars trying to undo overhiring that they did during the pandemic. Are we still seeing a Covid hangover that accounting firms and Wall Street could be dealing with for some time?
Mark: Some accounting firms have carried out multiple layoffs to “right-size” their business because not as many people as voluntarily exited as they would like. These firms significantly beefed up hiring during the pandemic, in part to help clients deal with the volatile environment. The layoffs of the past few years have proven to be insufficient, in some cases, and firms have had to cut more deeply.
Where is demand for KPMG’s advisory work weakening?
Mark: Wednesday’s cuts center on consultants regulatory risk advisory, customer operations and financial services, people familiar with the matter told me. Meanwhile, KPMG said other parts of the advisory business like transactions, strategy and artificial intelligence are growing.
Do KPMG’s audit and advisory cuts signal that other Big Four firms might take similar actions?
Mark: This trend is ongoing. The last three years has seen a series of formal rounds of cuts by the firms, in addition to regular performance-related culling.
Do you think we’re seeing a shift now in how top accounting firms manage their workforce?
Mark: Artificial-intelligence adoption, though not necessarily the cause of these cuts, is helping firms boost the efficiency of their operations. They say the technology allows their workers to do more complex work. At the same time, the nature of work is changing, meaning firms will have to rethink the specific positions they seek in the future.
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