Consultancy job crunch

Graduate roles at the Big Four accountancy firms are being replaced by AI, while many others have already been offshored. Who will survive the crisis in consultancy? View in browser Barney Macintyre • Friday 18 July 2025 Dear friend, Welcome to the Boardroom Sensemaker, The Observer's weekly newsletter for the board chairs, directors and executives in charge of Britain's biggest businesses.         Long stories short UK unemployment hit 4.7 per cent, its highest rate in four years. Meta poached two more of Apple's key AI experts. Apollo Management entered talks to buy a stake in Atlético Madrid.                                           Consultancy job crunch Consultants are facing the awkward task of researching AI-driven job cuts within their own industry. This week a McKinsey report found that job vacancies in the UK economy fell by 43 per cent since 2022, with the decline in postings for white collar jobs nearly twice the decline seen elsewhere. So what? Across the professional services sector there's a dawning realisation: the disrupters have become the disrupted. This crisis in consulting includes the replacement of entry-level and graduate roles with AI; a reduction in the money spent on consultants by governments, especially in the US and UK; and lingering reputational problems linked to firms' work, whether it's marketing for opioid companies or drawing up reconstruction plans for warzones. Rightsizing, as firms 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 agentic AI's ability to knock together a passable PowerPoint presentation or research document has caused severe attrition to roles at the lower end of the pay scale. Not so Big Four. This is particularly evident in a subset of professional services. The four major accounting firms – Deloitte, EY, PwC and KPMG – posted 44 per cent fewer job adverts for graduates this year compared with 2023. "Historically, accountancy firms have typically had a pyramid structure – wide base, heavy graduate recruitment," said Ian Pay from ICAEW, the industry body for chartered accountants. "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 judgement calls." Cuts to graduate cohorts since 2023 have ranged from 6 per cent at PwC to 29 per cent at KPMG. According to James O'Dowd, founder of talent advisers Patrick Morgan, these have been accompanied by senior employees being paid more and the increased offshoring of jobs. Going global. Up to a third of some firms' administrative tasks are carried out in countries such as India and the Philippines where labour costs are lower. "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 research by Patrick Morgan, last year Deloitte cut year-on-year headcount in the Netherlands by 5 per cent, and increased its workforce in Malaysia by 9 per cent; KPMG cut headcount in the UK by 7 per cent and raised it by 10 per cent in Pakistan; EY cut its Germany office by 6 per cent and grew in Indonesia by 7 per cent; and PwC, following an accounting scandal in Australia, cut its workforce there by 18 per cent, while increasing roles in Mexico by 12 per cent. Pressure on. Competition is also heating up in the sector, partly driven by private equity's growing interest in buying and scaling smaller firms. PE-backed deals for accountancy companies 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?'" What's more… Similar problems are faced by the likes of McKinsey, BCG 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. The Nibs Capital Economy, business and finance Copycats More than 11,000 firms have been struck off the UK's Companies House register following a campaign by financial crime agencies to remove corporate structures suspected of facilitating fraud. A two-day blitz involved teams from the Met Office, City of London Police, South Wales Police, and HMRC, ambushing 11 locations where 30 trust and company service providers were operating. One astonishing example of how the register has been abused was an address in London that had between 4,000 and 5,000 businesses registered, many of which were actually located overseas. Another involved more than 750 "clone" restaurants appearing last year on Companies House. They included names like "Dishoomm", "Ottolenghii" and "Basilicoo" and listed directors that had their identities stolen. Despite efforts to clean up the register, the scale of fraud remains daunting: more than £100 billion is laundered through the UK each year according to the National Economic Crime Centre. Technology AI, science and new things Your ride is here Uber has agreed a deal with electric vehicle manufacturer Lucid and self-driving start-up Nuro to launch its first fleet of autonomous robotaxis. The ride-hailing company will receive 20,000 EVs from Lucid in return for a $300 million stake, making it the second largest shareholder behind the PIF, the Saudi sovereign wealth fund. It is also joining Nuro's series E round, which has valued it at $6 billion. Uber's self-driving taxi service will be rolled out over a six year period in an undisclosed US city, starting in 2026. The firm faces stiff competition from Tesla, which has recently launched a robotaxi trial in Austin, and Alphabet's driverless taxi unit, Waymo, which is expanding rapidly. Lucid shares surged 39 per cent on Thursday, despite having fallen by nearly a quarter since the start of this year. Our planet Climate and geopolitics Bidding wars The UK's green energy industry has hit back against Reform's suggestion that it will axe subsidies for wind and solar if the party comes to power, arguing that it is putting "politics before prosperity". In a letter to renewable energy developers including SSE, Scottish Power and Ørsted, the deputy leader of the party, Richard Tice, claimed the net zero agenda "no longer enjoys cross-party support" and that firms' participation in the next round of bidding for energy contracts would carry "significant political, financial, and regulatory risk" for their shareholders. James Alexander, CEO of the UK Sustainable Investment and Finance Association, said it was "a great shame that some politicians would rather attack the sector instead of seizing the huge potential that it offers", adding that he'd "welcome confirmation from the government to confirm that such contracts are legally enforceable". Culture Society, identity and belonging K-beauty booms President Trump's threat of 25 per cent tariffs on South Korea has led to a boom in American consumers bulk-buying popular cosmetic and skincare products from the country. Exports from the K-beauty industry, which has grown in global popularity with K-pop and K-dramas, rose 15 per cent to reach $5.5 billion in the first half of this year. Since April, when Trump announced the plans, there's been a marked rise in influencers stocking up and displaying K-beauty hauls online. "The future is uncertain, but there is one thing I am certain about," said Taylor Bosman Teague while unboxing bottles of toner and moisturisers in front of half a million TikTok followers. "I am not willing to lose certain Korean skin-care products." Thanks for reading. Please tell your friends to sign up and tell us what you think. Barney Macintyre barney@observer.co.uk Follow Follow The Observer on social media on your preferred platform:   The Observer     The Observer Food Monthly The Observer Magazine The Observer New Review   Listen Listen for free in the Tortoise app or wherever you get your podcasts: Want to change how you receive these emails? 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