KPMG thinks that it may reflect pent-up demand from the end of COVID lockdowns - halfway through the previous financial year - finally petering out.

Expectations that the momentum would continue were dashed when higher interest rates and inflation started to bite late last year - hitting both corporate deal activity and consulting.

“It feels like there is still some uncertainty in the environment, not just in our profession, but more broadly,” he says, but stops short of calling a recession.

“It’s definitely a more cautious sentiment than it was a year ago, but it doesn’t feel so dramatic that I think we’re in for a particularly hard landing.”

The consulting industry is facing a different kind of hard landing, with the federal government using the PwC scandal to help wean the public sector off its multibillion-dollar reliance on consultants. It means hypervigilance is the name of the game for any firm looking to retain as much business as it can.

“We’re watching things on a much more frequent basis than we would in a more normal environment. The message that we have put into our teams is we just need to be making sure that work that we are putting ourselves forward for is truly value adding work for the government,” Yates says.

The consulting industry is facing a different kind of hard landing with the federal government using the PwC scandal to help wean the public sector off its multibillion-dollar reliance on consultants.

But there is no hiding from the problems facing the whole sector, particularly around conflicts of interest - an issue that is offering other reasons for these big firms to split their business.

EY global has just rejected a proposal from US private equity group TPG to break it up and take a stake in its consulting business, according to a statement reportedly sent to its partners last week.

TPG tabled an offer in July, just months after the collapse of EY’s own attempt to spin off the consulting business with a $US100 billion enterprise valuation.

It’s not the only big four firm that was facing break up questions this week.

Back in Australia, where PwC was forced to spin-off its government business for $1 in order to save it after PwC was effectively banned from government work, Deloitte was asked in a NSW parliamentary inquiry this week whether it should also consider such a move.

“From our perspective, we believe that the value that we can provide government is to have the capacity to bring global expertise and private sector expertise as, and when, required,” Deloitte chairman Tom Imbesi said.

It may not have a choice though, if big firms like Deloitte fail to convince the state and federal governments that it is not “walking both sides of the street’ by using information picked up from its government work to push business with its private sector clients.

Greens Senator Abigail Boyd brought up an example last week concerning Deloitte’s audit work for Santos at a time when it was advising the government on a report that would substantially impact on the industry.

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Deloitte said it did not see this as a conflict, but Boyd queried whether this was an issue that should have been determined by the government - not Deloitte.

“I think, what we are increasingly shocked by is that this is not a decision that gets made by the people actually hiring consultants, but actually by the consulting firms,” Boyd said.

“And there’s that lack of transparency then, where you’re not held accountable for - if, in fact - there is some mismanagement of that potential conflict of interest.”

Imbesi acknowledged that Deloitte might need to change this approach where it effectively polices itself.

“If there was a recommendation to provide more information at that (government) engagement stage, I think we would be open to that,” he said.

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