UK (Parliament Politic Magazine) –In recent developments reported in the Financial Times, Deloitte UK is planning to eliminate approximately 150 junior consulting positions across two of its consulting teams. This decision comes even as the firm’s partners earned an annual average exceeding £1 million last year.
These cutbacks are part of a broader initiative involving 800 layoffs announced by the Big Four firm in September. According to an internal presentation shared with staff last month, the reductions will primarily impact first- and second-year analysts within the firm’s consultancy and advisory divisions.
Deloitte’s Workforce Restructuring in the UK
In certain teams, a significant proportion of job cuts will affect early-career hires as Deloitte adjusts its workforce in response to a decrease in demand.
In a presentation, senior partners acknowledged, “Given the overall market downturn, the demand for junior-level positions has also declined. As a result, we are focusing on proposing redundancies at the first- and second-year graduate levels.”
Notably, the firm announced these reductions just weeks before revealing that its partners earned an average annual compensation of £1.06 million in the year ending in May. Deloitte’s partners have consistently received an average of over £1 million in earnings over the past three years.
Deloitte opted not to provide a statement regarding the reduction of graduate positions. However, they previously stated in September that specific roles within the company faced potential redundancy due to a targeted restructuring effort, prompted by a slowdown in growth across the business.
The Scope of Deloitte’s Workforce Reduction Plan
The presentation indicates that over 60% of the job cuts in the “enterprise technology and performance” segment, which falls under Deloitte’s UK consulting business and centers on supply chains and IT services, are likely to affect graduate positions.
Within that specific team, Deloitte intends to make staff reductions, affecting 18 out of the 74 first-year graduates and 85 out of the 218 second-year graduates.
In the “human capital management” division, which offers human resources advisory services, Deloitte is planning to terminate 45 out of 172 graduate positions, representing more than half of the department’s total layoffs. Within this team, 18 out of the 51 first-year graduates and 27 out of the 121 second-year graduates will be affected.
It’s important to note that graduates who commenced their employment in September 2023 will not be impacted by these layoffs, as indicated in the presentation.
Challenges in a Changing Economic Landscape
The broader job reduction initiative will encompass employees in various business sectors beyond consulting, which implies that more graduates are likely to be impacted. However, acquire comprehensive details regarding the breakdown were not retrieved. An individual with knowledge of Deloitte’s operations indicated that first- and second-year graduate positions did not constitute the majority of at-risk jobs throughout the entire firm.
Deloitte reported an increase in its client-facing workforce, with numbers rising from 18,163 in 2021 to 19,851 in the prior year, as many businesses sought consulting services to navigate the challenges posed by the Covid-19 pandemic. This data is derived from the company’s 2022 annual statement.
Nevertheless, over the past year, the sector has grappled with escalating expenses and diminished demand from major corporations amid heightened economic uncertainty. Simultaneously, the surge in interest rates has brought an end to the M&A frenzy that had previously fueled deal advisory activities.
Impact on Deloitte’s UK Operations
PwC communicated to its UK workforce in June to anticipate more modest salary increases and bonuses for the current year. In August, EY revealed plans to reduce its workforce by 150 positions within its UK financial services consulting division. This week, KPMG informed its employees about the impending termination of 110 individuals in its UK deals division, following a previous announcement of 125 redundancies in its consulting segment.
The planned workforce reductions equate to a 3% reduction in Deloitte’s substantial 27,000-strong workforce in the United Kingdom, as reported by a source to Reuters news agency.
Deloitte’s CEO, Richard Houston, conveyed in a statement, “Today, we unveiled a series of focused structural adjustments within our operations that, contingent on consultation, could result in certain positions facing potential redundancy. This course of action is in response to a deceleration in our growth trajectory, coupled with the enduring economic uncertainty, compelling us to carefully evaluate our business structure, potentially necessitating difficult decisions.”