KPMG UK Proposes Significant Staff Reductions in Audit Division
KPMG's UK arm has informed nearly 600 employees in its audit business that their roles are at risk as part of a cost-cutting initiative in response to challenging market conditions. The proposed restructuring could result in up to 440 exits if the redundancy process proceeds, according to reports from Bloomberg and the Financial Times.
Details of the Audit Business Cuts
The affected staff, primarily assistant managers who are qualified accountants, have been notified of potential layoffs, subject to a formal consultation period expected to run until mid-May. This move impacts roughly 6% of KPMG UK's audit division, which employs approximately 7,100 people. A spokesperson for KPMG UK stated that the decision is driven by unusually low staff turnover in certain audit areas, necessitating a "right-sizing" of the workforce to align with current demand.
The firm emphasized that this is not a decision taken lightly, highlighting the need to adapt to market dynamics where attrition rates have fallen significantly.
Advisory Arm Also Faces Redundancies
In addition to the audit cuts, KPMG has separately announced plans to reduce around 120 roles in its advisory business, with hundreds more potentially considered for redundancies. Most of these job losses are expected in the enterprise risk division, which focuses on governance, risk, and compliance advice for companies. Back-office roles and an economics team are also affected.
Insiders described the advisory cuts as "pretty devastating," particularly for employees who experienced similar disruptions last year. Senior leaders are under pressure to meet budgets amid a prolonged slowdown, with the firm reportedly carrying "a large bench" of unassigned consultants for about six months due to fewer projects in the pipeline.
Broader Industry Pressures and AI Transition
These job cuts underscore ongoing strains across the professional services sector, which is grappling with cost management after a post-pandemic expansion and a subsequent decline in consulting demand. Other major firms, such as McKinsey & Co., have also discussed layoffs, with potential cuts affecting thousands of jobs over the next 18 to 24 months.
KPMG's audit reductions are somewhat unusual, as previous Big Four redundancy rounds have typically focused on consulting or support functions, given the more stable nature of audit work. However, low attrition has led to an oversupply of junior staff, mirroring similar moves by PwC, which cut 175 junior auditors last year.
Financial Performance and Leadership Strategy
KPMG employs about 16,700 people in the UK, with the advisory arm accounting for nearly half of annual sales. Despite a 3% decline in advisory revenue last year—consistent with trends at EY, PwC, and Deloitte—the firm's overall profitability improved. Profit before tax rose 14% to £576 million, attributed to careful cost management in response to economic cycles.
UK chief executive Jonathan Holt, who recently lost a bid to become KPMG's next global chief, has been driving profitability through measures such as cost cuts, pay freezes, and reduced headcount. As a result, UK partners received an average of £880,000 for the 12 months to September, an 11% increase, marking the first time in over a decade that KPMG's UK partners were paid more than those at PwC and EY.
The consultation processes for both audit and advisory cuts are ongoing, with final numbers to be determined based on feedback and market conditions.
