PwC Layoffs Signal Uncertainty as Firms Take Stock of Economy

The latest layoffs for PwC’s US workforce likely mark just the beginning of cuts at the Big Four firms as they grapple with economic uncertainty, low turnover, and competition from smaller private-equity backed firms.

Beyond shedding roughly 2% of its workforce—1,500 jobs mostly in its tax and assurance staff—PwC plans to slow down its campus recruiting and will offer internships to a smaller cohort for next year. The reductions are meant to align the firm’s 75,000 employees with market needs, said a person familiar with the firm’s actions.

PwC is “positioned for the future, to meet the needs of our clients as they evolve and to lead in a fast-changing marketplace,” the firm said in a statement, calling the layoffs a “difficult decision.”

Its announcement Monday comes as the accounting giants, like other US companies, are taking stock of how policy shifts from Washington could alter the economy and their clients. Competitor Deloitte last month said it would make small personnel changes to its federal contracting business amid government cost-cutting under the Trump administration.

Additional job cuts or reinvestment in other areas “may not be an indication that the sector is slowing down considerably but rather reorienting where those needs are,” said Mark Masson, managing partner of the professional services consulting practice at Lotis Blue Inc.

Slimmer Staff Sizes

The Big Four firms also face headwinds unique to the accounting sector, including the advent of more capable artificial intelligence and responding to competition from smaller private-equity-backed competitors. In response, they’ve consolidated their service lines and international practices, said James O’Dowd, managing partner with the executive search firm Patrick Morgan.

PwC LLP last fall cut 1,800 jobs as it streamlined its US advisory unit and relocated its technology developers. Globally, KPMG has merged firms in Europe and the Middle East with plans for more combinations.

“They don’t feel that they need the same amount of staff to do the same work anymore because they can automate a lot more and they can hire oversees,” O’Dowd said.

Two years of record low voluntary departures led to PwC’s job cuts, not the firm’s evolving use of artificial intelligence, a person familiar with the firm’s strategy said. The firm steered staff to open jobs in higher-growth areas of its business before moving to reduce its headcount, the person added.

Pipeline Effects

Campuses are not yet noticing dampening of student interest in the accounting profession based on the shifts.

PwC’s layoffs “don’t raise any alarms” given that cuts have happened before and they represent a small fraction of the Big Four firm’s total workforce, said Brad Badertscher, department chair of accountancy at the University of Notre Dame.

Still, accounting students also have skills for jobs beyond the traditional accounting path, opening them up to roles in investment banking, for example, Badertscher said.

“If something happened to the Big Four—or a slowdown—I think we would be looking to really promote our students to these other ways,” he said.

Demand for accountants overall remains “incredibly high,” with mid-size and smaller firms continuing to have a strong need for talent, said Liz Burkhalter, director of CPA Pipeline at the American Institute of Certified Public Accountants.

The profession faces shrinking rates of accounting graduates and lost more than 300,000 working accountants during the height of the Covid-19 pandemic. Still, last year US master’s degree programs in accounting reported a spike in applications and undergraduate programs saw increased enrollment.

State lawmakers have rushed to help ensure a steady supply of qualified accountants by changing licensing requirements.