Top story: KPMG’s UK consulting struggles continue

KPMG is lacking in the UK.

While KPMG UK has made strides in rehabilitating its audit division under Jon Holt's leadership, the firm’s consulting and advisory services remain a critical area of concern. Once mired in scandals, including its role in the collapse of Carillion, KPMG’s audit division has experienced a significant turnaround. Regulatory praise and consecutive positive audit quality reports highlight the firm’s progress. However, its consulting arm continues to lag behind Big Four peers, raising questions about KPMG’s overall trajectory.

Holt, a career auditor, has focused on stabilizing the firm’s reputation after years of regulatory scrutiny and internal missteps. He implemented cultural reforms, tied diversity and inclusion targets to partner remuneration, and emphasized audit quality. These measures helped KPMG regain client trust and regulatory confidence, with revenues from the audit division rising 30% between 2021 and 2023. Yet, this focus on audits has left its consulting services under-resourced and less competitive.

KPMG’s consulting revenues grew by 33% to £1.01 billion between 2021 and 2023, but this pales in comparison to EY’s 57% growth over the same period. Industry observers note that KPMG has not invested as heavily in senior talent or technology, areas where rivals like Deloitte and PwC have excelled. A recruiter commented that KPMG’s consulting talent is no longer viewed as a competitive match for its peers. Analysts have also flagged KPMG’s limited global integration as a barrier to servicing multinational clients effectively.

Despite these challenges, Holt sees opportunities to strengthen consulting. Plans to merge the UK and Swiss operations aim to enhance cross-border capabilities, aligning with client demands for integrated services. Holt also defends the firm’s profitability metrics, emphasizing strategic decisions to manage partner numbers and maintain competitive earnings.

However, KPMG remains the smallest of the Big Four in the UK, with total revenue of £2.96 billion in 2023. A former consultant noted that KPMG struggles to scale its consulting offerings globally or in technology-driven sectors, leaving it vulnerable in a competitive market. While Holt projects optimism, critics question whether the firm’s consulting arm can match the transformative gains seen in its audit division.

As KPMG seeks to sustain its turnaround, its ability to compete in consulting will likely determine its long-term success. Holt’s leadership extension until 2029 provides time to execute a cohesive strategy, but the firm must address its advisory shortcomings to solidify its place among the Big Four.

Read more here.

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