Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Deloitte wants to slash 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 business was introducing “firmwide cost management measures” because of “challenging market conditions” in the UK.
The email, sent in October, said the firm was targeting a reduction of more than 50 per cent in spending on travel and expenses until 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 continued struggles of the UK consulting sector, which has been hit by a period of more sluggish demand after a pandemic-era boom when companies sought help with implementing new technology. A prolonged slowdown in mergers and acquisitions activity has also hit advisory work.
The email, sent by Sarah Humphreys, chief operating officer of the tax and legal division, said the firm was considering additional cost-cutting measures, including reviewing its “recruitment agency costs, licence fees, bad debts and global recharges”.
The tax and legal division had decided to reduce travel and entertainment expenses “as these are the least disruptive areas for adjustments”, she added in the email to senior members of her department.
Deloitte has made more than 1,000 redundancies in the UK, where it employs about 25,000 people, since September 2023. The firm has also been pushing out workers deemed to be underperforming, including about 250 advisory staff this autumn, the Financial Times reported 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 a market slowdown, Deloitte’s 749 UK equity partners were paid an average of more than £1mn for the 12 months to May 2024.
It was the only Big Four firm to exceed the threshold in its most recent financial year. It achieved the feat despite revenues for its consulting division, its largest service line, declining by 1 per cent in the 12 months to May 2024, and sales at its financial advisory practice falling by 2 per cent.
UK financial services consulting faces gloomy forecasts. Source Global, a research group, said in October that while growth in the market for financial services consulting would almost double to about 5 per cent worldwide in 2024, the market in the UK would shrink by 2 per cent.
Deloitte reorganised its UK operations this year to fall in line with a global overhaul that aimed to cut costs and reduce the organisation’s complexity. Its main business units were reduced to four — audit and assurance; strategy, risk and transactions; technology and transformation; and tax and legal — from the five the firm had previously.
Deloitte said: “Like many organisations, we are looking carefully at our costs to ensure we’re able to meet clients’ needs while continuing to make investments in our firm and our people.”
