What's happened
The Big Four consulting firms are experiencing significant revenue declines and layoffs as demand for advisory services slows. PwC reported a 12.7% drop in net income, while EY and Deloitte also saw reductions in partner payouts and consulting revenues. The firms are adjusting to a post-pandemic market.
What's behind the headline?
Revenue Declines
- PwC reported a 12.7% decline in net income for FY2024, with significant losses in China.
- EY's revenue growth fell from 16% to just 3%, driven by declines in consulting and transactions.
- Deloitte's consulting revenues contracted from 19.1% growth to only 1.9%.
Layoffs and Workforce Adjustments
- Deloitte laid off 250 employees in the UK, marking its third round of layoffs in 13 months.
- EY cut around 300 jobs last year, while KPMG and PwC have also made workforce reductions.
Future Outlook
- The firms are investing in AI capabilities, with PwC committing $1.5 billion to expand its technology services.
- Despite current challenges, there is optimism that AI will drive future growth as companies seek consulting on digital transformation.
What the papers say
According to Business Insider UK, PwC's Mohamed Kande stated that the findings from the Evergrande audit were in 'stark contrast' to the firm's standards, highlighting the reputational damage faced by the firm. Meanwhile, EY's Hywel Ball noted that the decrease in partner payouts reflects a rise in the number of partners, indicating a shift in the firm's financial structure. Deloitte's Richard Houston emphasized the need for cost management in a challenging market, suggesting that the firm is proactively addressing its operational efficiency. The Financial Times reported that the Big Four firms are all facing similar pressures, with consulting revenues declining across the board, leading to layoffs and restructuring efforts.
How we got here
The Big Four firms—PwC, EY, Deloitte, and KPMG—expanded rapidly during the pandemic due to increased demand for consulting services. However, as the market has cooled, these firms are now facing revenue declines and are implementing layoffs to adjust to the new economic reality.
Go deeper
- What led to the revenue declines for these firms?
- How are the Big Four firms adapting to the market changes?
- What impact will AI have on consulting services?
More on these topics
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Deloitte Touche Tohmatsu Limited, commonly referred to as Deloitte, is a multinational professional services network. Deloitte is one of the Big Four accounting organizations and the largest professional services network in the world by revenue and number
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KPMG International Cooperative is a multinational professional services network, and one of the Big Four accounting organizations.
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PricewaterhouseCoopers is a multinational professional services network of firms headquartered in London, United Kingdom, operating as partnerships under the PwC brand.