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FT.comT&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here. https://www.ft.com/content/3768ec77-2b1f-444d-8ad8-679412889f70 Job cuts at McKinsey and KPMG this month are the first concrete sign that a boom in spending on consultants that started during the pandemic might be over, as clients move to reduce costs and battle inflation.
Companies short on staff and desperate to make their operations digital after the pandemic paid record amounts to consultants in the past two years. Demand for advice on tech, dealmaking and implementing net zero pledges fuelled a boom in consultants’ profits and ignited a pay and recruitment war.
But soaring costs, the end of near-free borrowing for clients and a slump in deal activity have led to a more difficult outlook for parts of the big consultancies’ businesses — and spurred the first significant cuts in the sector, following the announcement of big lay-offs at large companies such as Meta and Goldman Sachs.
KPMG is cutting nearly 700 jobs in its US advisory business and about 200 in Australia — about 2 per cent of its total workforce in each country. Meanwhile McKinsey will make up to 2,000 of its 45,000 people redundant as part of a global restructuring following years of rapid expansion.
Frantic hiring by consultants in the past 18 months had been reminiscent of the surge in recruitment during the dotcom boom more than two decades ago, which ended in mass lay-offs, said Fiona Czerniawska, chief executive at analyst Source Global Research.
“I think we’ll see more [redundancies] than we saw in Covid but not as much as we saw in 2002 because firms are more circumspect about the reputational damage of letting large groups of people go,” said Czerniawska.
Consultants remain busy advising on tech, ESG and supply-chain issues but areas such as deal advisory are quieter, according to people in the industry.
“The market is still buoyant but we’re in a period of steady growth, rather than the hypergrowth that accompanied the post-pandemic deals frenzy,” said Kevin Ellis, UK chair of PwC.
The slump in dealmaking has hit the banking sector particularly hard, leading them to slash how much they spend on consultants.
In two years as head of Italian lender UniCredit, Andrea Orcel has cut the bank’s €150mn annual spend on consultants by more than half.
Credit Suisse aimed to halve its spending on consultants last year, compared to 2021 when it spent SFr2bn on professional services hiring 16,430 consultants, contractors and outsourced workers. It reduced its external consultant headcount by a fifth in the final quarter of 2022. Its roster of advisers has included McKinsey, which reviewed risk management and worked on a 2021 revamp of the business and Deloitte, which advised on pay policy.
Fellow Swiss bank UBS has also been slashing spending on consultants as part of its drive to cut $1bn of costs by the end of this year.
Globally, consultants’ revenue growth is expected to slow from 10.8 per cent in 2022 to 7.7 per cent this year, according to research by Source Global. The Big Four — Deloitte, EY, KPMG and PwC — reported global revenue increases of between 8 and 18 per cent in their most recent annual results.
In the UK, KPMG has been moving staff, including deal advisers, to other parts of the firm where there is more work, people familiar with the matter told the Financial Times. The firm declined to say how many employees were moving but said that its model of combining multiple business lines allows it to “redeploy people into the busy areas of our business as the economy shifts”. It said it was not considering any UK redundancies.
As well as transferring people between business lines, PwC’s UK arm had been increasing the number of staff it was seconding overseas, including in areas where there was more demand for advisers, said Ellis. The firm is betting that the arrangement will help the Middle East business, where government-backed projects have driven a surge in consulting, and incentivise staff to join or remain. PwC UK also said it was not currently planning any redundancy programmes.
The Big Four have a long history of moving people from one part of their business to another in response to tough economic conditions. Consultants at other firms said a pivot by the Big Four, McKinsey, Bain and Boston Consulting Group away from deals work and into other areas, including ESG, tech and turnround work, would increase price competition.
One senior consultant in the UK said he had heard about competitors offering clients free consulting advice from staff with nothing else to do.
But transferring employees between divisions has become more difficult in recent years as consultants become more specialised in areas such as regulation, risk and cyber security. “It’s harder in practice than in theory,” said one Big Four executive.
Uneven growth in different parts of the firms could mean some business lines keep recruiting while others let staff go.
McKinsey’s job cuts are focused entirely on staff who do not work for clients directly, such as those in human resources, technology and communications. The firm was seeking to centralise some of its support teams after expanding from 28,000 people to 45,000 in the past five years, including through a series of acquisitions, said a person familiar with the details.
Several people in the industry said firms that avoid formal redundancy programmes for client-facing staff could seek to more aggressively “manage people out” of their businesses by clamping down on minimum performance requirements. “I think that’s bound to happen,” said Czerniawska.
Consultants slashed their own costs such as travel during the pandemic but those savings have already been largely absorbed by salary increases.
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McKinsey, Bain and Boston Consulting Group unveiled one of the biggest rounds of pay rises for new hires in more than two decades last year, raising base annual salaries for MBA hires in the US to more than $190,000.
Rapid recruitment in the past two years has been predicated on high staff turnover rates, which have now slowed. A more sluggish economy means staff now have fewer exit options. A more difficult funding environment for start-ups, which increasingly compete with consultancies for staff, has also reduced attrition.
“No one is going off from here to create a hydrogen start-up now,” said the Big Four executive.
The other question for the people running large consultancies is whether record partner payouts can be sustained. Pay for the average UK partner at Deloitte and PwC topped £1mn in 2022.
High profits “can be sustained by making bigger cutbacks”, said Czerniawska, adding that firms would have to think carefully about whether to try to repeat last year’s payouts. “What clients are asking for is innovation, and that takes money. Therefore perhaps [consultants] should accept lower profits while making those big investments.”
SPY daytrade ez a mai beomlas eppen belefer a tegnap vart szerkezetbe, ahol wave(iv) kozel kesz, es egy kicsit melyebb wave(v) esesre lehetett szamitani. http://keptarhely.eu/view.php?file=20230223v02x4pdju.jpeg Talan meg egy kicsit melyebbre is eshet, idealisan (v)=(i) szokasos meret eseten kb. 3900-3920 savig is beeshet. Most 3950, itt epp van egy support, szoval lehet hogy (iii of v) kb. itt van, es meg egy iv-v hullampar van hatra, amit par ora alatt megcsinalhat lefele. , http://keptarhely.eu/view.php?file=20230224v02xa9r92.jpeg
Ilyen ez a rohadt tőzsde, amikor tavaly novemberben shortra raktam, akkor akkorát ugrott infla után, hogy stop nem tudta megfogni az adott szinten. +7% volt Nasdaq. Most, hogy longba voltam, rotty. :(
Mi az eves 30% novekedes elorejelzest levagtuk 5%-ra, de csak hogy jol mutasson a befektetok elott. Lehet nulla lesz, vagy kis csokkenes.
Azt latjuk, hogy az elektromos auto piac nagyon porog, de a hagyomanyos szektor inkabb fekez.
A cegvezetes az elmult 3 rekord ev utan most H1-ben totalis koltseg stoppot rendelt el. Van penz boven, de szerintem most a reszveny arfolyamot akarjak szinten tartani a fegyelemmel. Max a kollegak nem utaznak annyit, meg nincs csapatepito.
50% -os kihasználtság azt jelenti, hogy fele annyit gyárt, mint amennyit gyárthatna. Általában egy gyár (főleg egy kínai), ilyenkor átszervez, kirúg stb stb. Max az amortizáció ami kevésbé térül meg az eredeti tervekhez képest. a Melósokat ilyen esetben ritkán tartják 100%-on.
Ezen a számon egyáltalán nem lepődöm meg. De most tedd fel a kérdést, hogy ezt meddig lehet tartani? Covid miatt talán még óvatosak a cégek a leépítésekkel, egy kis döccre nem raknak ki embereket, de idén azért elválik ám, hogy ez egy kis döcc, vagy nem. Ha nem, akkor én semmi jóra nem számítok. Nem lehet végtelenségig projekt nélküli embereket fizetni.
"ami után 6-12 hónappal recessziónak kéne jönni de egyelőre semmi jele." Nekem azért fura ez, mert én abszolút érzem a pangás szagot a munkahelyen. Projektek nem jönnek vagy lassulnak, és nem csak nálunk.
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cimu topic folytatasa. Minden fenti temaba vago hozzaszolast szivesen latunk.