KPMG Cuts 400 US Advisory Roles Amid Demand Slowdown & AI Focus

KPMG has cut approximately 400 positions within its U.S. Advisory division as demand slows for services in key sectors, including regulatory risk advisory, customer operations and financial services. The cuts, representing roughly 4% of the advisory workforce, were announced to employees on Wednesday.

A person familiar with the matter told Business Insider that employee attrition rates have been lower than anticipated, contributing to the need for the reductions. Despite the layoffs, KPMG continues to hire in areas such as AI transformation, cybersecurity, and managed services, with a particular focus on engineers and specialists.

Strategic Realignment and AI Focus

KPMG spokesperson Russ Grote stated that the firm’s actions are centered on a “strategic realignment to make sure our people’s skills and capabilities are aligned with future demand.” He added that KPMG “will continue to support our people in upskilling for the future, while evaluating the size, shape, and skills of our workforce to best serve the market.”

The firm employs over 276,000 people globally, with more than 10,000 in its U.S. Advisory business. This business is divided between deal advisory and strategy, which has experienced strong growth, and the consulting practice, which assists clients with broader transformations.

While some areas of the consulting business are thriving – including cybersecurity, managed services, and forensic departments – the demand for services in regulatory risk advisory, customer operations, and financial services has decreased, prompting the workforce adjustments.

AI Integration and Performance

KPMG is actively integrating artificial intelligence (AI) into its operations and encouraging employee adoption. Earlier this year, the firm launched the “AI Spark Innovation Awards” within its advisory division, offering cash prizes to consultants who demonstrate innovative applications of AI. Rob Fisher, KPMG US’s vice chair of advisory, previously stated the awards recognize “an incredible thing that they’ve done with AI.”

The firm has also introduced a dashboard allowing employees to track AI usage among their peers and set personal AI-related goals. This initiative reflects a broader trend within the consulting industry towards leveraging AI to enhance efficiency and service delivery.

While KPMG is employing a combination of incentives and support to encourage AI upskilling, other firms, such as Boston Consulting Group, are integrating AI metrics into employee performance evaluations. Niale Cleobury, KPMG’s global AI workforce lead, told Bloomberg in October that the firm is now requesting employees to outline their plans for AI utilization in their annual performance goals.

KPMG US has not commented on whether AI usage is formally incorporated into performance evaluations. However, Tim Walsh, the firm’s US chair and CEO, stated in November that employees “you need to adopt and use the tools that are being provided because it’s critical to your success in the future.”

Broader Trends in Consulting

The layoffs at KPMG occur amidst a broader shift in the labor market, where employee turnover has decreased following the surge in resignations during the “Great Resignation” of 2021-2022. As workers prioritize stability, the rapid advancement of AI is reshaping job requirements and influencing workforce decisions.

The consulting industry is undergoing significant changes as firms adapt to the increasing prominence of AI and the evolving needs of their clients. KPMG’s actions reflect a proactive approach to aligning its workforce with future market demands and capitalizing on emerging opportunities in areas such as AI and cybersecurity.

Earlier this year, KPMG also cut 10% of its U.S. Audit partners as part of a multiyear effort to “align the size, shape and skills” of its workforce. The firm characterized these cuts as a form of “rightsizing” and emphasized that they were not performance-related.