Days after PwC announced it is slashing 700 jobs in Australia, Deloitte, the globe’s largest professional services firm and second-largest in Australia, has followed suit.
A fallout of demand due to the Covid-19 induced economic crisis is hitting the revenues of the largest accounting and consulting firms. While the Big Four have to date been able to cover up the storm reasonably well, mainly because the crisis unleashed in the final quarter of what already was a strong year* meaning they had the buffers to absorb the hit, now that they are planning for a new year they are taking drastic measures to recalibrate their workforce.
In the United States, Canada and India, Deloitte shed over 3,000 jobs in the past weeks, and in a statement released earlier, Deloitte Australia CEO Richard Deutsch confirmed that the firm has been forced to let go around 7%, or some 700 professionals, of its 10,000-strong workforce in Australia.
“Unfortunately, the last quarter of our 2020 financial year has seen a substantial drop in revenue and operating profit. We expect this trend to extend into at least the first quarter of our new financial year.”
He added, “This has not been an easy day”… because “from the beginning of the COVID-I9 crisis two of our important principles have been to preserve as many jobs as possible while also protecting the long-term sustainability of the firm.”
The need to tighten its belt was however inevitable, given the fact that Deloitte’s fee income in Australia has fallen by around 20% compared to the same period last year. “The cuts would not have occurred had it not been for the impact of Covid-19,” said Deutsch.
Between 2015 and this year, Deloitte was on a roll in Australia, growing its revenues with double digits for five consecutive years from $1.3 billion to $2.3 billion, closing more than fifteen deals in the process.
The job slashing measure comes after Deloitte already asked its partners and staff to take a pay cut for five months, and the unprecedented move of closing all its offices in the country to save costs and facilitate a mandatory request on all employees to take five days of unpaid leave.
In a day full of crisis meeting, Deloitte’s 900-odd partners were informed in a briefing this morning, and in the afternoon the firm’s staff were invited to attend a firm-wide conference call.
Consulting and Advisory taking the hit
While Deloitte has not unveiled a detailed breakdown of the job losses, known is that it will hit its consulting (Deloitte Consulting, Deloitte Digital, Monitor Deloitte) hardest, as well as its advisory business (Financial Advisory Services). According tao data from Australian Financial Review, the utilisation rates of the two divisions are currently between 60% to 65%, well below of plans and healthy profitability levels.
The audit and assurance practices, which are performing steadily at around 77% of utilisation, will be spared any reductions.
Consulting services are hit hardest as clients typically see them as discretionary spending, and have as a result been pausing or cancelling consulting projects. There are a few exceptions – restructuring, digital, subsidies and reorganisation consulting services are enjoying heightened demand as clients seek external support to help them navigate the crisis landscape.
Last week, PwC’s CEO Tom Seymour announced it is slashing 400 jobs, and earlier, Big four rival KPMG shed 200 jobs in Australia.
This story has not been edited by SightsIn Plus, published from a wire agency feed without modifications to the text. Source: https://www.consultancy.org/
