KPMG cuts about 1,900 more US jobs
June 27, 2023
The layoffs will include cuts in its audit business — a notable shift given the company and the industry have recently struggled with accounting talent shortages.
New York-based KPMG U.S. is laying off about 1,950 employees — roughly 5% of its 39,000-person workforce — with cuts extending across all of its businesses, including tax, auditing, and advisory services, according to company spokesperson Russ Grote.
The layoffs follow an earlier round in February in which the Big Four accounting firm laid off nearly 700 staff in the advisory side of its business, or what was then close to 2% of its total U.S. workforce, CFO Dive previously reported.
The company began notifying employees affected by the latest cuts Monday and will complete the process by the end of the summer, the spokesperson said, with those affected receiving three-weeks pay plus severance based on the amount of years worked at the company. Grote confirmed partners were included in the cuts.
KPMG US Chair and CEO Paul Knopp, in an internal company message shared with CFO Dive, said economic pressures and lower than expected attrition led the company to take the action.
“While our pipeline of opportunities is strong and we continue to win in the marketplace, we are experiencing economic headwinds that are not unique to our business or firm,” Knopp stated. “These economic headwinds, coupled with historically low attrition, translate into a significant mismatch between the size of our workforce and the measure of resources that will be needed to deliver services in the coming year. The workforce reduction is designed to address that mismatch.”
The broader economic headwinds that led to the layoffs included a slowdown in the transaction market, which is one of the drivers of demand for the company’s advisory as well as some of its tax and auditing services, according to the company. Technology and automation were not factors that led to the reductions, Grote said.
In contrast, Citi CFO Mark Mason at a conference earlier this month said the New York-based bank’s ambitious technology initiative partly drove his company’s plans to cut 5,000 jobs this year.
One difference in KPMG’s latest action compared to earlier this year is that the latest cuts extended beyond the advisory business to the audit business, a notable shift given that the accounting industry as well as KPMG itself has worked to pump up the pipeline of Certified Public Accountants amid concerns about a shrinking pool of workers with the core accounting skills.
Asked whether the company is still grappling with a shortage of accounting talent, Grote said KPMG currently has the right capacity and skills it needs but remains focused on investing in the “talent pipeline.”
Beyond KPMG, the labor market is flashing mixed signals. Last week, Federal Reserve Chair Jerome Powell said inflation has persisted at more than twice the central bank’s target partly because demand for labor has far exceeded supply for many months, CFO Dive previously reported. A springtime surge in job gains persisted last month as employers hired 339,000 workers and wage growth — while slowing from a 4.9% annual rate a year ago — rose 0.3% during the month and a still-strong 4.3% during the past 12 months.
At the same time, the drum beat of continued layoff announcements that began in Silicon Valley last year continue and have extended to other sectors. Among the latest big names: Ford Motor is poised to lay off at least 1,000 salaried employees and contract workers, The Wall Street Journal reported Tuesday.
KPMG isn’t the only large accounting firm to cut staff: Ernst & Young in April said it was planning to cut around 3,000 jobs from its U.S. workforce due to shifts in demand and “overcapacity” in sections of its business, CFO Dive previously reported.
[CFO Dive]
