Key highlights
- Deloitte is to lay off roughly 1,200 people in the United States
- The job cuts would result in a 3% decrease in overall staff at Deloitte’s Risk and Financial Advisory division.
- A slump in merger and acquisition and a post-pandemic hiring spree are said to be the cause of the layoffs. This may also impact negatively its Nigeria operations.
Deloitte has announced job cuts, becoming the second of the Big Four financial consulting firms to do so. The company, which has its headquarters in London and had annual sales of $59.3 billion in 2022, reportedly informed its staff that it would be laying off roughly 1,200 people in the United States.
Four days prior to Deloitte’s announcement, Ernst & Young, another Big Four consulting firm, had also announced job cuts, citing “overcapacity” as the reason for about 3,000 layoffs in the United States.
Who will be most affected?
The Financial Times reported that the job cuts would result in a 3% decrease in overall staff at Deloitte’s Risk and Financial Advisory division.
When taken as a whole, the 3,000 Deloitte employees who will lose their jobs represent 1.5% of the company’s total U.S. workforce.
The reason for the job cuts
The job cuts are not unconnected to the post-pandemic hiring spree also witnessed by other financial advisory firms as the effect of Covid pandemic began receding.
For instance, Deloitte’s US headcount increased from 65,000 in 2021 to 80,000 by the end of last year.
Another reason is that the company is now responding to a decline in its consulting business, which has caused ambiguity among current and potential staff members.
In particular, its financial advisory business has been impacted severely due to a slump in merger and acquisition activities.
This function was very key in the firm as it had 6,000 M&A professionals in over 150 countries to advise strategic corporate buyers and private equity investors throughout the entire M&A deal lifecycle.
The professionals were involved in strategizing, designing, and implementing end-to-end solutions for successful transactions, from advance-planning to post-transaction restructuring driving performance and results in every key M&A-related function.
Its M&A expertise has brought organizations together through mergers and acquisitions, or carving them out through separations and divestitures addressing integration, consolidation, and separation needs throughout the lifecycle of the transaction.
However, with the post-pandemic hiring spree and loss of M&A deals, major cuts are now taking place.
According to Jonathan Gandal, a Deloitte managing director, “Our US businesses continue to experience strong client demand as growth in select practices moderates, but we are now taking modest personnel actions where necessary.”
Job cuts at the Big Four
Deloitte’s workforce reduction is not as drastic as that of some of its professional services competitors.
KPMG announced in February that it would lay off less than 2% of its US workforce, Accenture would lay off 2.5% of its total workforce and Ernst & Young will lay off 5% of its US workforce.
Furthermore, McKinsey & Co intends to cut 2,000 jobs, making it one of the firm’s largest staff reductions to date.
Ironically, these professional service firms, which advise clients on layoffs, have now put a halt on a hiring spree that had been ongoing for several years.
These job cuts may unfortunately impact Deloitte’s operations in Nigeria as well as other locations.