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Deloitte wants to reduce employee travel expenses and costs in the UK by more than 50 percent, as it wants to maintain the partner's profits during a reduction 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 “strong cost control measures” due to “difficult market conditions” in the UK.
The email, sent in October, said the firm aims to cut more than 50 percent in travel expenses and expenses until the end of the current fiscal year in May. The cuts were described as “limited” and “temporary”.
The cost-cutting is a sign of the ongoing struggles of the UK's consulting sector, which has been hit by a period of sluggish demand after the pandemic when companies needed help implementing new technology. Long delays in integration and employment have also affected the counseling profession.
The email, sent by Sarah Humphreys, chief tax and legal officer, said the company was considering measures to reduce additional costs, including reviewing “recruitment agency costs, license fees, bad debts and global restructuring”.
The tax and legal department has decided to reduce travel and entertainment expenses “as these are the most disruptive areas of adjustment”, he added in an email to senior members of his department.
Deloitte has made more than 1,000 redundancies in the UK, where it employs around 25,000 people, from September 2023. The company has let go of employees deemed to be underperforming, including around 250 consulting staff this autumn, the Financial Times reported. report in advance.
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 tough choices this year”.
Despite the market downturn, Deloitte's 749 partners in the UK were paid an average of over £1mn in the 12 months to May 2024.
It was the only Big Four firm to break the barrier in the most recent financial year. It achieved the feat despite revenue from its consulting division, its biggest service line, falling 1 percent in the 12 months to May 2024, with sales of financial advisory programs falling 2 percent.
UK financial services face a bleak outlook. Source Global, a research group, said in October that growth in the financial services consulting market will almost double to around 5 per cent worldwide by 2024, the UK market will shrink by 2 per cent.
Deloitte has restructured its UK operations this year to align with global restructuring aimed at cutting costs and reducing organizational complexity. Its main business units have been reduced to four – audit and assurance; strategy, risk and transactions; technology and change; and tax and law – from five firms before.
Deloitte said: “Like many organisations, we are looking carefully at our costs to ensure we can meet the needs of our clients while continuing to invest in our firm and our people..”