KPMG cuts 400 US advisory consultants as demand slumps in key sectors

Key facts

• KPMG laid off about 400 consultants, roughly 4% of its US advisory workforce, on May 3, 2026.
• Cuts focused on regulatory risk advisory, customer operations, and financial services due to slowing demand.
• Approximately 2% of the 4% reduction was tied to performance; the rest driven by demand shifts.
• Employee attrition rates have been lower than expected, reducing natural headcount reduction.
• KPMG is still hiring engineers and specialists for AI transformation, cybersecurity, and managed services.
• The firm employs over 276,000 people worldwide, with more than 10,000 in its US advisory business.
• PBF Energy's virtual annual meeting ratified KPMG as auditor, indicating stable audit demand.

Layoffs hit US advisory as demand falters

KPMG has cut roughly 400 consultants from its US advisory division, representing about 4% of the unit's workforce, as demand slows in several core consulting areas. The layoffs were announced during a noon conference call on Wednesday, May 3, 2026, after employees received calendar invitations as early as the previous day. The reductions target consultants in regulatory risk advisory, customer operations, and financial services — segments that have seen a sharp drop in client demand in recent months, according to a person familiar with the matter. The move underscores the pressure facing even the largest professional services firms as economic uncertainty curbs corporate spending on consulting.

Strategic realignment, not just cost-cutting

Russ Grote, a KPMG spokesperson, said the firm's actions 'focus on a strategic realignment to make sure our people's skills and capabilities are aligned with future demand.' He added that KPMG 'will continue to support our people in upskilling for the future, while evaluating the size, shape, and skills of our workforce to best serve the market.' The layoffs are not purely a cost-cutting exercise. The firm is simultaneously hiring for roles in AI transformation, cybersecurity, and managed services, with a particular focus on engineers and specialists who can support clients in deploying artificial intelligence. This dual approach — shedding staff in weakening areas while investing in growth fields — reflects a deliberate reshaping of the workforce.

Performance-based cuts and low attrition compound the reduction

Approximately half of the 4% reduction — roughly 2% of the advisory workforce — was tied to underperformance, the person familiar said. KPMG, like other Big Four firms, conducts annual performance reviews that rank employees, and those in the lowest tier are often let go. The remaining 2% came from project teams where demand had evaporated, affecting a range of roles from associate to senior consultant. Employee attrition rates have been lower than expected, meaning fewer people left voluntarily, which reduced the natural headcount shrinkage the firm might have relied on. With fewer departures, KPMG had to resort to layoffs to align staffing with current demand.

Contrasting fortunes: advisory struggles, audit and some consulting thrive

KPMG's US advisory business employs more than 10,000 people, split between deal advisory and strategy — which focuses on transactions and acquisitions and has seen strong growth — and the consulting practice that helps clients transform their operations. While the consulting side is cutting jobs, parts of it are booming: cybersecurity, managed services, forensic departments, and AI transformation are all hiring. In a separate development, PBF Energy, a major US oil refiner, held its virtual annual shareholder meeting on the same day and ratified KPMG as its auditor, alongside approving director elections and compensation plans. The vote signals continued confidence in KPMG's audit work, which remains a stable revenue stream even as advisory faces headwinds.

Broader industry implications and economic context

KPMG's layoffs are not an isolated event. The Big Four — Deloitte, PwC, EY, and KPMG — are all navigating a slowdown in consulting demand as clients tighten budgets amid economic growth deceleration, inflation, and technological shifts. The rise of AI is both a threat and an opportunity: it automates some traditional consulting tasks while creating new demand for transformation expertise. The cuts also reflect a structural change in the consulting market. Clients are increasingly seeking specialized, high-impact projects rather than broad-based advisory retainers. KPMG's decision to prune underperforming units and invest in AI and cybersecurity positions it for the next cycle, but the immediate pain for those laid off is real.

Outlook: a leaner, more focused KPMG

KPMG's strategic realignment suggests the firm expects the demand slump to persist, at least in certain sectors. By cutting 400 positions now, it aims to avoid deeper layoffs later. The continued hiring in AI and cybersecurity indicates where the firm sees future growth — areas that require different skills than traditional consulting. The company is likely to offer severance packages and outplacement support, standard for large professional services firms. For the broader industry, KPMG's move may prompt rivals to reassess their own staffing levels. The consulting world is watching closely: if demand does not rebound, more cuts could follow.

The bottom line

• KPMG laid off 400 US advisory consultants (4% of the unit) on May 3, 2026, due to slowing demand in regulatory risk, customer operations, and financial services.
• Half of the cuts were performance-based; the other half came from project teams with reduced demand.
• Low attrition rates contributed to the need for layoffs, as fewer employees left voluntarily.
• The firm is actively hiring for AI transformation, cybersecurity, and managed services, focusing on engineers.
• KPMG's audit business remains stable, as evidenced by PBF Energy's ratification of the firm as auditor.
• The layoffs reflect broader economic pressures and a strategic shift toward high-growth areas like AI.