Deloitte closes offices and sends employees on 1 week leave

03 April 2020 Consultancy.eu

Against the gloomy backdrop of the economic crisis triggered by the coronavirus, many consulting firms are having to take cost cutting measures. In Australia, Deloitte has taken perhaps the most drastic measure so far: the professional services giant has closed its door for a week and forced all employees to take leave.

All over the world consulting firms are being forced to change the way they are operate, including working remotely with clients. But as clients fall into financial hardship, they typically slash their spending on external consultants, regarded a discretionary spend. As a result, consultancies are seeing the chargeability of their consultants drop dramatically, with a growing number of them forced to ‘sit on the bench’.

This in turn is forcing consulting firms – companies with a salary-heavy cost structure – to look critically at their spending. Many have already taken drastic measures to bring down costs, including implementing part time working, salary cuts or even firing people in underperforming parts of their business.

Deloitte is sending employees on forced 1 week leave

But to date, no large consulting firm has gone as far as what Deloitte will be effectuating later this month in Australia. The Big Four firm has told all of its 11,000 staff down under to stay home and take five days of compulsory annual leave in the week of April 20th. To save costs, the company will also close all its offices for the week.

An email sent to all staff by Deloitte Australia Chief Strategy Officer Clare Harding read, “All our employees and partners need to take one week of leave during this period…  Please make sure it doesn’t adversely impact client engagements or deliverables.” Also, staff should “do their best to be as productive as possible during this time” to boost their chances of keeping their jobs in the case the firm may have to lay off people in the foreseeable future.

One month ago, Deloitte and the three other Big Four firms – EY, KPMG and PwC – said that they were confident that they would not have to cut their staff in the country as a result of the coronavirus.

This initial confidence however has now turned out to be a fallacy. According to news outlet AFR, KPMG has since moved to cut 200 roles from its 9,000-strong workforce and slashed 20% of the salary of salaried partners and staff earning more than $62,000 (with status quo working hours), while EY has frozen some payments to partners and is currently crafting plans for further cost reductions across the business.

Meanwhile, at Grant Thornton, partners will take pay cuts of between 20% and 50%, and nearly all staff have agreed to cut their hours and pay starting this month.

While the coronavirus is across the board a major blow for consultants, some segments of the industry such as restructuring, financing and crisis management are instead seeing heightened demand.


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