In a significant blow to the consulting industry in Australia, several big firms are cutting staff as demand from financial services and public sector clients declines. EY Oceania is the latest firm to announce job cuts, with 232 people, or more than 2 percent of its workforce, being made redundant. This follows similar staff reductions at PwC, KPMG, and Deloitte, amounting to a total reduction of approximately 2 percent of their collective workforce.
The decline in demand for consulting services can be attributed to a variety of factors, including an uncertain economy and a crackdown on the use of consultants by the public sector. High interest rates, a slump in mergers and acquisitions, and a growing number of scandals have also contributed to clients deferring or delaying hiring consulting firms.
EY had previously avoided cutting staff during the COVID-19 pandemic downturn but has now been forced to make difficult decisions due to the sharp decline in demand. The firm’s CEO, David Larocca, expressed surprise at the downturn and hoped for a rebound in demand by mid-2024. However, EY insiders have indicated that the staff cuts are also motivated by a desire to protect partner profit margins and reduce overhead costs.
The consulting industry in Australia is also facing other challenges, including issues with its working culture and tax scandals involving former partners. A scathing report into EY’s culture revealed complaints of overwork, bullying, harassment, and racism within the firm. Additionally, the firm recently identified itself as the employer of a former partner involved in promoting tax exploitation schemes.
As consulting firms navigate these difficulties, leaders must weigh the impact on partner profits against the risk of being understaffed in the event of a demand rebound. The fallout from the PwC tax leaks scandal has further exacerbated the decline in the use of consultants by government entities.
Overall, the consulting industry in Australia is grappling with multiple challenges that have led to significant job cuts. The industry’s future will depend on its ability to adapt to changing client demands, address issues within its working culture, and regain the trust of public and private sector clients.
FAQs
1. Why are consulting firms in Australia cutting jobs?
Consulting firms in Australia are cutting jobs due to a decline in demand from financial services and public sector clients. Factors contributing to the decrease in demand include an uncertain economy, a crackdown on the use of consultants by the public sector, high interest rates, a slump in mergers and acquisitions, and growing scandals.
2. How many people have been affected by the job cuts?
EY Oceania has cut 232 people, PwC has cut 344 people, KPMG has cut 300 people, and Deloitte has also made unspecified job cuts. In total, these reductions constitute approximately 2 percent of the collective workforce of these consulting firms.
3. What challenges is the consulting industry in Australia currently facing?
In addition to decreased demand and job cuts, the consulting industry in Australia is dealing with issues related to its working culture and tax scandals involving former partners. A scathing report highlighted complaints of overwork, bullying, harassment, and racism within the industry. The fallout from the PwC tax leaks scandal has also led to a significant decrease in the use of consultants by government entities.
4. What is the outlook for the consulting industry in Australia?
The consulting industry’s future in Australia will depend on its ability to adapt to changing client demands, address issues within its working culture, and regain the trust of public and private sector clients. The industry is hopeful for a rebound in demand by mid-2024, but it will need to navigate various challenges to regain its position.