Deloitte, one of the Big Four consulting firms, has announced plans to significantly reduce staff travel and expenses in the UK by over 50% until the end of May 2024. This measure is part of the firm’s efforts to sustain partner profits amid a downturn in the consulting sector.
In an internal email seen by the Financial Times, Sarah Humphreys, Chief Operating Officer of Deloitte’s Tax and Legal division, outlined the firm’s cost-cutting strategy. Beyond travel and expenses, Deloitte is also reviewing spending on recruitment agency fees, software license costs, bad debts, and global recharges to further reduce operational costs.
Since September 2023, Deloitte has implemented over 1,000 job cuts in the UK, where it employs approximately 25,000 people. The layoffs have primarily targeted underperforming staff, aligning with broader cost-saving initiatives. Earlier this year, Richard Houston, Deloitte’s UK Senior Partner and Chief Executive, emphasized the necessity of reducing the firm’s cost base, acknowledging the difficult decisions required.
Despite the consulting market slowdown, Deloitte’s 749 UK equity partners earned an average of more than £1 million in the 12 months leading up to May 2024, making it the only Big Four firm to surpass this threshold. This came even as revenues in its consulting division, the firm’s largest service line, declined by 1%, and sales in its financial advisory practice dropped by 2% during the same period.
To streamline operations and cut costs, Deloitte reorganized its UK structure in line with a global overhaul earlier this year. The firm reduced its main business units from five to four: Audit and Assurance; Strategy, Risk, and Transactions; Technology and Transformation; and Tax and Legal.
Significance
Deloitte, like other major consulting firms, is currently grappling with the challenges posed by technological advancements that have disrupted traditional consulting models and significantly impacted revenue streams. The recent cost-cutting measures therefore reflect an urgent effort by Deloitte to adapt to these changes while ensuring partner profits remain robust.
