Deloitte targets slashing UK travel and expenses spending by half

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Deloitte wants to cut staff travel and spending in the UK by more than 50 percent, as it looks to maintain partner profits during a downturn 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 was introducing a “firmwide cost management system” due to “challenging market conditions” in the UK.

The email, sent in October, said the firm aimed to cut travel and expenses costs by more than 50 percent by the end of its current financial year in May. The cuts were described as “limited” and “temporary”.

The cost cuts are a sign of the continued struggles of the UK’s consultancy sector, which has been hit by slower demand after the pandemic-era boom when companies sought help implementing new technology. A prolonged slowdown in mergers and acquisitions activity has also hit consulting work.

The firm is considering additional cost-cutting measures, including a review of its “recruiting agency costs, license fees, bad debt and global recharges,” said Sarah Humphreys, chief operating officer of the tax and legal division, in an email.

The tax and legal department decided to reduce travel and entertainment expenses “as these are the least disruptive areas for adjustments”, he added in an email to senior members of his department.

As of September 2023, Deloitte has made more than 1,000 redundant jobs in the UK, where it employs around 25,000 people. The firm is also shedding staff it deems underperforming, including about 250 advisory staff this fall, the Financial Times reported. Report in the past

Richard Houston, Deloitte’s UK senior partner and chief executive, warned this year that the firm would have to “carefully consider our cost base and make some tough choices this year”.

Despite the market downturn, Deloitte has 749 UK equity partners is provided An average of over £1 million for the 12 months from May 2024.

It is the only Big Four firm to have crossed the threshold in its most recent financial year. It achieved the feat despite revenue for its consulting division, its largest service line, falling 1 percent in the 12 months to May 2024 and sales in the financial advisory practice falling 2 percent.

UK financial services consultants face gloomy forecast. Source Global, a research group, said in October that growth in the global financial services consultancy market would almost double to around 5 per cent in 2024, with the UK market shrinking by 2 per cent.

Deloitte this year restructured its UK operations to align with a global overhaul aimed at cutting costs and reducing organizational complexity. Its main business units have been reduced to four – audit and assurance; Strategies, Risks and Transactions; Technology and Transformation; And tax and legal — were earlier than five firms.

Deloitte said: “Like many organisations, we are carefully watching our costs to ensure we are able to meet client needs while continuing to invest in our firm and our people.”