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Deloitte wants to cut staff travel spending and expenses in the UK by more than 50 percent, as it seeks to maintain partner revenue during a slowdown in the professional services sector.
An email sent to partners and directors of the Big Four consultancy seen by the Financial Times said the business had introduced “firmwide cost management measures” due to “challenging market conditions” in the UK.
The email, sent in October, said the company is targeting a reduction of more than 50 percent in travel spending and expenses by the end of the current fiscal year in May. The cuts were described as “limited” and “temporary”.
The cost-cutting is a sign of continued struggles in the UK’s consulting sector, which has hit a period of weaker demand after a surge during the pandemic when companies sought help implementing new technology. A prolonged slowdown in mergers and acquisitions activity has also hit consulting work.
The email, sent by Sarah Humphreys, chief operating officer of the tax and legal division, said the company is considering additional cost-cutting measures, including a review of “recruitment agency costs, license fees , bad debts and global recharges”.
The tax and legal division decided to reduce travel and entertainment expenses “because these are the least disruptive areas for changes”, 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, by September 2023. The company is also pushing out workers it deems unfit, including around 250 advisory staff today autumn, the Financial Times previously reported.
Richard Houston, the senior partner and chief executive of Deloitte in the UK, warned this year that the firm had to “be very careful about our cost base and make some tough 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 company to exceed the threshold in the most recent financial year. It achieved success despite revenues for its consulting division, its largest service line, declining 1 percent in the 12 months to May 2024, and sales in its financial advisory practice falling to 2 percent.
UK financial services consulting faces bleak forecasts. Source Global, a research group, said in October that while the market growth for financial services consulting will almost double to around 5 percent worldwide by 2024, the UK market will shrink by 2 percent.
Deloitte reorganized its UK operations this year to align with a global overhaul aimed at cutting costs and reducing organizational complexity. The main business units were reduced to four — audit and assurance; strategy, risk and transactions; technology and innovation; and tax and legal – from the five the company previously had.
Deloitte said: “Like many organisations, we look closely at our costs to ensure we meet the needs of clients while continuing to make investments in our company and our people..”