What’s Behind the Big 4 Layoffs?

With all the recent news of tech layoffs, one wonders if other industries are being impacted. Turns out – public accounting is being impacted and at the highest levels. 📉

The ground tremors felt recently in the accounting world weren’t just metaphorical – they were the echoes of a significant shift unfolding within the Big Four. The Wall Street Journal’s December report of “Big Four” firms laying off dozens of partners, including senior staff at EY and KPMG, is a stark reminder that even the top echelon isn’t immune to changing tides in the accounting industry.

Is there more to this than merely reducing payroll and headcount? There may be other factors. While partner layoffs are rare in accounting, these decisions could reflect deeper trends:

⬇️ Slower Growth, Slower Demand: Consulting and transaction services, major revenue drivers for Big Four firms, are facing a slowdown. This has led to cuts in both partner and staff positions, with EY laying off dozens of US partners and KPMG seeing reductions in advisory, tax, and back-office staff.

⬇️ Overinflated Workforces? The rapid expansion of consulting practices during the pandemic may have left firms vulnerable to economic fluctuations. As business transformation projects lose priority and deal volume slumps, the need for large consultant teams shrinks.

⬇️ Automation’s Shadow: Traditional audit and tax services are seeing increasing automation, further impacting employment needs.

What to do with this information? Is this another storm to weather or is it a call to action for CPAs at all levels? Either way, CPAs in firms of all sizes should be considering and/or acting on the following initiatives:

💡 Embrace Continuous Learning: Upskilling in data analytics, cyber security, and ESG expertise is crucial to stay competitive in the face of automation and changing client needs.

💡 Become a Specialist: Develop a niche in a high-demand area like ESG reporting, blockchain, or data analytics to stand out from the crowd. Or develop a specialty within tax or audit function (industry, entity type, etc)

💡 Cultivate Adaptability: Be prepared to pivot within your firm or even branch out to other sectors where your skills are needed.

The accounting landscape is evolving, and partner layoffs are a signal of the pressure points in this transformation. While uncertainty exists, it also presents opportunities for proactive CPAs who embrace lifelong learning, specialization, and adaptability. By investing in their skills and staying ahead of the curve, CPAs can not only weather the storm but thrive in the reimagined future of accounting.

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