KPMG, a major global firm offering Audit, Tax, and Advisory services, has been making headlines for a challenging reason: layoffs. In the ever-changing business world, KPMG has had to reduce its workforce in recent years. This blog post will explain the details of these layoffs, why they happened, and how they are affecting the company and its employees.
KPMG Overview
KPMG is a global professional services firm that provides audit, tax, and advisory services. With a presence in over 140 countries, KPMG employs more than 200,000 people worldwide. The company has built a reputation for delivering high-quality services to its clients, which include many of the world’s largest corporations and government entities.
However, like many businesses, KPMG has faced challenges in recent years. Economic uncertainty, changing market conditions, and the need to remain competitive have led to difficult decisions, including layoffs.
KPMG Layoffs Details
In 2023, KPMG announced two rounds of layoffs in the United States. The first round affected approximately 700 employees, primarily in the advisory segment, representing about 2% of the U.S. workforce. Later that year, the firm cut an additional 5% of its U.S. workforce, which amounted to around 2,000 workers. This second round impacted all areas of the firm, including audit, advisory, and tax.
KPMG’s layoffs have not been limited to the United States. In 2024, the company plans to cut an additional 200 jobs in the United Kingdom. These cuts will focus on back office and client-facing roles as part of an effort to simplify operations and reduce costs in response to a market slowdown.
Reasons Of KPMG Layoffs
Several factors have contributed to the KPMG layoffs. One of the primary reasons is the slowdown in business and the need to cut costs. Like other Big Four accounting firms, KPMG has been facing challenging market conditions. Economic uncertainty, increased competition, and changing client demands have put pressure on the company to adapt and streamline its operations.
In addition to the layoffs, KPMG has implemented other cost-cutting measures. For example, the firm has frozen pay for about 12,000 staff members in the UK. It has also revoked job offers to some overseas graduates due to changes in UK immigration rules.
The impact of the layoffs has been significant for affected employees. Many have expressed disappointment and frustration, particularly those who were laid off shortly after busy seasons or after making significant contributions to the firm. Some employees have also raised concerns about the fairness and potential bias in the selection process for layoffs, with newer staff members seemingly being disproportionately affected.
Number Of Employees & Departments Affected
In 2023, KPMG made the difficult decision to let go of about 5% of its U.S. workforce, which translates to around 2,000 employees. This round of layoffs impacted all areas of the firm, including audit, advisory, and tax departments.
Earlier that same year, the company had already cut 2% of its U.S. staff, mainly in the advisory segment. Across the pond, KPMG UK announced plans in 2024 to eliminate an additional 200 positions, focusing on back-office and client-facing roles. This move comes on the heels of 200 job cuts and a pay freeze for about 12,000 UK staff at the end of 2023.
Severance Packages For Laid-off Employees
The layoffs have hit junior staff particularly hard, with many expressing feelings of betrayal and disappointment. Reports suggest that some employees received minimal severance packages, such as just 4-6 weeks of pay.
This has left many struggling to make ends meet while searching for new employment opportunities. The situation has raised questions about the fairness and adequacy of the support provided to those affected by the layoffs.
Statements From KPMG Leadership Regarding Layoffs
KPMG leadership has issued statements addressing the layoffs, emphasizing the need to adapt to economic pressures and maintain operational efficiency. They have acknowledged the difficult decisions made and the impact on their workforce.
For the UK layoffs, KPMG has stated that a consultation process has begun, and those affected are expected to leave the business by October 1, 2024. The firm has committed to supporting its people through these changes, although the extent and nature of this support remain unclear.
KPMG Financial Condition
KPMG has shown strong financial health and growth even with recent economic challenges. In 2021, the company reported global revenues of $32.13 billion, which is a 10% increase from the year before. This growth came from its services: advisory services grew by 17%, audit services by 4%, and tax and legal services by 8%. KPMG has also invested over $1.5 billion in environmental and social projects and is working to improve audit quality with tools like the KPMG Clara platform, a smart cloud-based audit tool.
The KPMG Financial Performance Index (FPI) tracks how well companies are doing financially and helps spot trends. Despite some ups and downs, KPMG’s financial health remains strong due to its smart investments and focus on quality and innovation.
Conclusion
KPMG, a major global firm known for its Audit, Tax, and Advisory services, has had to reduce its workforce due to recent economic challenges. Despite reporting strong financial results and making significant investments in environmental and social projects, the company faced the tough decision to lay off around 2,700 employees in the U.S. and another 200 in the U.K.
These layoffs were necessary to cut costs and adjust to changing market conditions. While KPMG’s leadership has promised support for those affected, including efforts to assist them during this transition, many employees are facing difficulties, especially with limited severance packages. As KPMG moves forward, its ability to balance financial health with employee support will be key to its ongoing success.
