Consultants are facing the awkward task of researching AI-driven job cuts within their own industry. Last week, a McKinsey report found that job vacancies in the UK economy have fallen by 43% since 2022, with the decline in postings for white-collar jobs nearly twice that seen elsewhere.
Across the professional services sector there is a dawning realisation: the disrupters have become the disrupted. A many-sided crisis in consulting includes the replacement of entry-level and graduate roles with AI, a reduction in spending on consultants by governments and reputational problems linked to companies’ work, whether it is marketing for opioids or drawing up reconstruction plans for warzones.
Rightsizing, as companies prefer to call it, was inevitable after the post-Covid consultancy boom was punctured by sluggish growth and higher borrowing costs. But recent data shows the ability of agentic AI – agents that can make decisions and take actions on our behalf – to knock together a passable PowerPoint presentation or research document has caused severe attrition of roles at the lower end of the pay scale.
This is particularly evident in a subset of consultancies. The big four accounting firms – Deloitte, EY, PricewaterhouseCoopers and KPMG – posted 44% fewer jobs for graduates this year compared with 2023.
“Historically, accountancy firms have typically had a pyramid structure – wide base, heavy graduate recruitment,” said Ian Pay of the Institute of Chartered Accountants in England and Wales, ICAEW, the industry body. “Firms are now starting to talk about a ‘diamond model’ with a wide middle tier of management because, ultimately, AI is not sophisticated enough yet to make those judgment calls.”
Cuts to graduate cohorts since 2023 have ranged from 6% at PwC to 29% at KPMG. According to James O’Dowd, founder of talent adviser Patrick Morgan, these are accompanied by senior employees being paid more and more job offshoring. Up to a third of some firms’ administrative tasks are carried out in countries with lower labour costs such as India and the Philippines.
“There’s no secret that bigger firms have been doing offshoring for quite a long time,” Pay said. “Firms slightly lower down the chain have been starting to explore it too.”
According to Patrick Morgan research, last year Deloitte cut year-on-year headcount in the Netherlands by 5% and increased its workforce in Malaysia by 9%; KPMG cut its headcount in the UK by 7% and raised it by 10% in Pakistan; EY cut its Germany office by 6% and grew in Indonesia by 7%; and PwC, after an accounting scandal in Australia, cut its workforce there by 18%, while increasing roles in Mexico by 12%.
Competition is also heating up in the sector, partly driven by private equity’s (PE) growing interest in buying and scaling smaller firms. PE-backed deals for accountanc y companies firms ies in Europe rose from 10 to 20 deals in the years before 2022 to more than 100 in 2023 and nearly 200 in 2024.
“I think you’re going to see genuine competitors to the big four over the next one or two years,” O’Dowd said. “Private equity and AI influence is highlighting that the operating models of a lot of these older firms are quite inefficient … The question they should ask is: how do we change our talent, mix our people, our systems, our operating model to make it through the valley of death?”
Similar problems are faced by the likes of McKinsey, Boston Consulting Group and Bain. The industry that made disruption a cult is now getting a taste of its own medicine. For the graduates who do make it through, their jobs could look very different indeed.