The Big 4 Are Reshaping Themselves. What Does This Include?

Key Statistics:

 

• Layoffs exceeding 9,000 were reported in 2023, primarily affecting consultants in the US and UK.

• Consulting fees accounted for half of the combined revenue for the Big Four firms last year.

• Deloitte, Ernst & Young, KPMG, and PwC collectively cut more than 9,000 jobs across their largest markets in the US and UK, as well as in Australia and Canada.

• McKinsey trimmed 1,400 jobs, while Accenture eliminated 19,000 roles amid economic uncertainty.

• The value of global mergers and acquisitions shrank by 17% to $2.9 trillion in 2023.

• KPMG reported a slower 8% growth in local currency in 2023, compared to double-digit growth reported by its peers earlier in the year.

• Despite these challenges, the firms are adapting. They are shifting their focus towards technology advisory work and data analytics services to meet evolving client demands. This pivot, influenced by factors like interest rates and the AI boom, has led to layoffs in certain areas, such as deals advisory work.

 

In parallel, the Big Four are facing governance reforms prompted by scandals and strategic missteps. Initiatives include the introduction of boards to oversee management and approve strategy. National regulators are also scrutinizing governance structures, with recommendations for independent oversight boards and non-executive involvement.

 

As regulatory changes loom, the Big Four are preparing to comply, with efforts underway to separate audit businesses and enhance oversight. Challenges remain, particularly in defining the role of non-executive members and ensuring adequate compensation to attract top talent.

 

In summary, the Big Four are navigating a dynamic landscape characterized by changing client needs, economic pressures, and regulatory scrutiny, prompting them to adapt their strategies and governance structures accordingly.