Deloitte to cut at least 700 roles across the firm
Deloitte will cut seven per cent of its workforce, or at least 700 professionals, as the COVID-19 downturn hits demand for the big four firm's consulting services.
The firm's 10,000-strong staff were told about the cuts at a 2pm firm-wide meeting, after an earlier briefing held for Deloitte's 900-odd partners.
Deloitte has cut 7 per cent of its 10,000-strong workforce because of the COVID-19 downturn. Paul Rovere
The redundancies follow the firm cutting all discretionary expenditure earlier in the year, including asking staff to take a pay cut of 20 per cent for five months from May through to September, as part of a range of measures designed to preserve jobs amid the pandemic.
A number of Deloitte partners are also leaving, or have left, the firm early, but no details were provided. It's not clear if the cuts include the partners or just refer to staff.
Comment is being sought from the firm.
The move follows big four rival PwC cutting 400 roles in its consulting and financial advisory businesses and support function last week as a result of the pandemic. In March, KPMG also cut 200 jobs as part of a range of cost-cutting measures.
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, with performance well down in the final quarter due to the COVID-19 lockdown.
The lockdown saw clients cancel or delay consulting projects, with the firm also having to contend with growing price competition in the market.
Staff in the firm's financial advisory team expected to see redundancies last week, but hoped strong performers would instead be redeployed to busier divisions such as audit and assurance.
Members of audit and assurance were more optimistic their jobs would remain safe as they saw continued demand amid company reporting season.
This follows a junior auditor sending the firm's executive a viral letter claiming that members of the audit division were "extraordinarily disappointed" that they were forced to prop up the firm's struggling consulting arm and equity partners' income through "unfair" 20 per cent pay cuts despite remaining busy.
In an earlier partner webinar at the end of May, Deloitte chief operating officer Andrew Griffiths reported that the firm's utilisation of 65 per cent was five percentage points behind planned levels.
Audit and assurance work remained strong, however, with the division working at 77 per cent utilisation.
Financial advisory sat at around 60 per cent utilisation while consulting work sat in the mid-60s. Both were well below behind planned levels.
When announcing the 20 per cent pay cuts in April, Deloitte CEO Richard Deutsch described the plan as "the least worst option" that would preserve as many jobs as possible at the firm.
The staff salary cuts work out to an annualised pay cut of eight per cent. Partners took a bigger hit than staff, reducing their pay by 25 per cent.
“Our own Deloitte Access Economics team estimate that over 1 million jobs have been lost in the last three weeks. In this environment, a significant focus for my leadership team and me is to minimise job losses across our business," Mr Deutsch said in mid-April.
At the time, he told The Australian Financial Review that his focus was minimising any potential job losses at the firm amid the outbreak.
Like the approach of rival KPMG, Deloitte's pay cut not involve a commensurate cut to working hours, but no employee will have their salary fall below $65,000 a year. Staff were also offered an additional 10 days of leave in exchange for taking the cut.
Both the pay cuts and the redundancies come as Deloitte continues to hit its billing targets, partners were told in the May webinar.
Wider cost-saving measures by Deloitte were also proving successful, partners were told. Travel and accommodation costs were down by 75 per cent in May compared to April, and the firm was tracking ahead in its net cash position.
Deloitte expects a strong finish to the 2020 financial year globally despite the effects of the COVID-19 pandemic and has forecast global aggregate revenue of $US48 billion ($70.7 billion) and growth of 6 per cent.
While this maintains its position as the world's largest professional services firm by income, it continues to lag PwC in revenue in Australia.
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