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Deloitte wants to cut spending on staff travel and expenses in the UK by more than 50 per cent, as it seeks to maintain partner profits during a slowdown in the professional services sector.
An email sent to partners and directors at the Big Four consultancy, seen by the Financial Times, said the firm was introducing “firm-wide cost management measures” due to “challenging market conditions” in the UK.
The email, sent in October, said the company was aiming to cut spending by more than 50% on travel and expenses through the end of its current financial year in May. The cuts were described as “limited” and “temporary.”
The cost-cutting is a sign of the continuing struggles of the UK consulting sector, which has been hit by a period of sluggish demand following a pandemic-era boom when firms asked for help implementing new technology. The prolonged slowdown in mergers and acquisitions activity has also impacted advisory work.
The email, sent by Sarah Humphreys, chief operating officer of the tax and legal division, said the company was considering additional cost-cutting measures, including a review of “staffing agency costs, license fees, bad debts and global chargebacks”.
She added in an email to senior members of her administration that the Tax and Law Division decided to cut travel and entertainment expenses “because these are the least disruptive areas for adjustments.”
Deloitte has laid off more than 1,000 employees in the UK, where it employs about 25,000 people, since September 2023. The company has also fired workers deemed underperformers, including about 250 consulting staff this fall, the Financial Times reported. I mentioned previously.
Richard Houston, Deloitte's UK senior partner and chief executive, warned this year that the firm had to “carefully consider our cost base and make some difficult choices this year”.
Despite the market slowdown, Deloitte 749 equity partners in the UK It was paid An average of over £1 million for the 12 months to May 2024.
It was the only Big Four company to exceed this threshold in its last fiscal year. It achieved the feat despite revenues in its advisory division, its largest service line, falling 1 per cent in the 12 months to May 2024, and sales in its financial advisory practice falling 2 per cent.
Financial services consultancies in the UK face a bleak outlook. While growth in the financial services advisory market will almost double to about 5 per cent worldwide in 2024, the market in the UK will contract by 2 per cent, research group Source Global said in October.
Deloitte reorganized its UK operations this year in line with a comprehensive overhaul aimed at cutting costs and reducing the complexity of the organisation. The main business units have been reduced to four – Audit and Assurance; Strategy, risk and transactions; Technology and transformation; And tax and legal – of the five that the company had previously.
Deloitte said: “Like many organisations, we look carefully at our costs to ensure we can meet client needs while continuing to invest in our company and our people.“.
