Deloitte has announced it will cut around 7% of its workforce – roughly 700 jobs – as the pandemic sparks a second round of job cuts, this time directed at the professional services industry.
In spite of the fact that Deloitte was on-track to hit $2.5 billion in revenue, a 10 per cent jump, Deloitte couldn’t escape a collapse in the professional services sector.
According to the AFR, “partners were told on Monday that the firm was on track to deliver revenue growth of about 14 per cent over the first three quarters of the firm’s financial year but that growth had collapsed in the final quarter due to the pandemic.”
A year-on-year comparison of May 2019 and 2020 showed a 19% drop.
Deloitte has previously asked its staff to accept an 8% pay cut, and its partners to take a 25% pay cut; a number of staff were offered 10 days of additional leave if they accepted the pay cut.
The economic downturn has resulted in wide scale postponements of major projects from Deloitte’s clients. Deloitte’s consulting and financial advisory sectors are set to feel the brunt of the layoffs, with its audit department set to be spared.
CEO Richard Deutsch has said that “from the beginning of the COVID-19 crisis, two of our important principles have been to preserve as many jobs as possible while also protecting the long-term sustainability of the firm.”
“Unfortunately, the last quarter of our 2020 financial year has seen a substantial drop in revenue and operating profit. We expect this trend to extend into at least the first quarter of our new financial year,” Deutsch added.
Competitors PwC and KPMG have made similar moves in the past few weeks, with PwC cutting 400 jobs in its financial advisory and consulting departments, and KPMG axing 200 from its job count.
Deloitte’s chief operating officer, Andrew Griffiths has said in a previous webinar that the company’s utilisation rate was 65%, five percentage points lower than its goal. Its audit and assurance work remained higher, at 77% utilisation.
In spite of the recent downturn, Deloitte has said the company is on target for a strong finish to 2020, set to report growth figures of around 6% with global revenues around $70 billion.