Deloitte aims to halve UK travel and expense spending

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Deloitte wants to cut spending on travel and staff expenses in the UK by more than 50 per cent as it seeks to maintain partner profits during a slowdown in the professional services sector.

An email sent to partners and directors at the Big Four consultancy seen by the Financial Times said the firm was introducing “cost management measures across the business” due to “challenging market conditions” in the UK.

The email, sent in October, said the company was targeting a more than 50 per cent reduction in travel and expense spending by the end of its current financial year in May. The cuts were described as “limited” and “temporary.”

The cost reduction is a sign of the continuing struggles of the UK consulting sector, which has been hit by a period of slower demand after a pandemic-era boom as firms sought help implementing new technologies. . A prolonged slowdown in M&A activity has also affected advisory work.

The email, sent by Sarah Humphreys, chief operating officer of the legal and tax division, said the firm was considering additional cost-cutting measures, including reviewing its “recruitment agency costs, licensing fees, bad debts and global recharges.”

The tax and legal division had decided to reduce travel and entertainment expenses “as they are the least disruptive areas for adjustments,” he added in the email to his department’s senior officials.

Deloitte has made more than 1,000 redundancies in the United Kingdom, where it employs about 25,000 people, since September 2023. The company has also been laying off workers considered poor performers, including about 250 advisory staff this fall, the Financial Times.

Richard Houston, senior partner and chief executive of Deloitte in the UK, warned this year that the firm had to “carefully consider our cost base and make some difficult decisions this year”.

Despite a market slowdown, Deloitte’s 749 UK equity partners received an average payout of more than £1 million over the 12 months to May 2024.

It was the only Big Four company to exceed the threshold in its most recent financial year. It achieved the feat even though revenue at its consulting division, its largest service line, declined 1 percent in the 12 months to May 2024, and sales at its financial advisory practice fell 2 percent. .

UK financial services consultancy faces grim forecasts. Source Global, a research group, said in October that while growth in the financial services consulting market would almost double to around 5 percent globally in 2024, the market in the UK would shrink by 2 percent.

Deloitte reorganized its UK operations this year to align with a global review that aimed to cut costs and reduce organizational complexity. Its main business units were reduced to four: audit and assurance; strategy, risk and transactions; technology and transformation; and fiscal and legal, of the five that the firm previously had.

Deloitte said: “Like many organizations, we are carefully analyzing our costs to ensure we can meet customer needs while continuing to invest in our business and our people..”