On Monday, a massive enterprise client with a $1 billion investment in Open AI’s ChatGPT platform announced layoffs for 1,500 employees. “We are moving forward with a workforce reduction across parts of our US firm— including Assurance, Tax and areas of our legacy Products & Technology business,” Deanna Byrne, head of assurance at PwC, said in an internal memo. PwC, one of the largest accounting and services companies in the world, cut about 2% of its U.S. workforce this week. PwC, together with KPMG, EY and DeLoitte, is part of the “Big Four” accounting firms – services companies that collectively employ 1.5 million people worldwide. AI is changing the workforce, right now, and these changes are just the tip of the iceberg.
Automation Driving Workforce Layoffs: Sources
A McKinsey report notes that 30% of hours worked will be reduced or even removed with automation in the next five years. Is AI the reason for the changes at PwC? Not entirely, but advancements in AI have undoubtedly played a role. According to their annual report, PwC’s revenues last year were up 4.3%. However, the growth in net income did not match that performance, coming in at just 1% – a reduction of nearly two-thirds versus the prior year.
Globally, the World Economic Forum Future of Jobs Report predicts that 92 million jobs will be displaced by technology. The same report says that 40% of employers expect to reduce their workforce in places where AI will allow them to do so. It seems PwC is stepping towards this future today, as part of a three-year partnership with Microsoft and OpenAI (parent of ChatGPT) that was announced in 2023.
In a speech titled, Algorithms, Audits and the Auditor, Kara M. Stein said, “Technology or computer-assisted analysis is a tool that can enhance, but cannot replace, professional skepticism and professional judgment.” Stein, a past commissioner of the SEC, is a board member at the Public Company Accounting Oversight Board. Human skepticism (judgement) is still needed, it seems. Yet the number of humans needed to deliver it is experiencing some (wait for it) skepticism.
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Attrition at major accounting firms has slowed, especially at higher levels. With the scarcity in white collar jobs, it’s no surprise. According to The Financial Times, PwC has cut back on campus hiring because of this low staff turnover. “We are in an era of reinvention, with many companies looking to transform their businesses through data, AI, and other advancing technologies while also building greater trust with stakeholders and upholding the integrity of the capital markets,”according to senior partner, Paul Griggs, head of operations for the firm across most of North America.
The impact for leaders today is clear: moving towards the future with AI means reallocating resources – and finding ways to cut costs often starts with layoffs. For companies large and small, it’s not necessarily financial hardship or tariffs that are driving the adoption of ChatGPT and other forms of AI. However, can you really blame an accounting firm for looking for more profitability? And a follow-up: are you a shareholder in said accounting firm?
Once driven by massive amounts of human leverage, services firms are rethinking how resources are allocated – and how automation can help reduce cost, improve efficiency and absorb various tasks. Layoffs at professional services organizations are here, not just in accounting, as AI drives restructuring and profits. Right-sizing an organization means finding ways to insert human oversight and collaboration with these new capabilities, as workforce layoffs will continue to dot the headlines.
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