KPMG is laying off nearly 700 people or about 2 percent of its workforce in the United States, to become the first among the Big Four accounting firms to do so, reports said on February 16.

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The job cuts were announced internally on February 15 by Carl Carande, vice-chair of KPMG’s US advisory business as the firm needed to “better align our workforce with current and anticipated demand in the market,” as per a memo to staff cited by the Financial Times.

According to the report, like other Big Four firms — EY, Deloitte and PricewaterhouseCoopers (PwC) — KPMG has been struggling with the collapse in merger and acquisition activity which has had an adverse impact on its deal advisory business, and easing demand for IT and strategic consulting.

"Our business and outlook remain strong. However, we have experienced prolonged uncertainty affecting certain parts of our Advisory business that drove outsized growth in recent years," a KPMG spokesperson told Reuters.

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The mass layoffs that started with tech firms, especially startups in 2022, have now been spilling over to several others including financial companies that slashed jobs in recent months. These include major Wall Street banks, asset managers and fintechs as they struggle to stave off macroeconomic challenges that have pressured consumers and soured demand in several mainstay business units.

The FT report claims KPMG had been trying to keep costs low by postponing the joining date for new hires, trimming travel budgets and transferring several consulting staff to the audit and tax sides of the business.

Multiple reports say this is also a result overhiring that many firms did during the COVID-19 pandemic anticipating that the demand for IT consulting and deal advisory work would remain the same.

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Though less than its peers, KPMG’s US headcount rose by more than 2,000 to 35,266 at the end of 2021, according to its most recent public report.

“We have experienced prolonged uncertainty affecting certain parts of our advisory business that drove outsized growth in recent years,” KPMG said, according to the report. It added that actions were incredibly difficult and impact people’s lives. The firm is supporting colleagues with a holistic package that includes severance, healthcare, emotional and wellbeing support, career counselling, and learning and development opportunities, it said.