Well they said it would happen and now it has.
The Big4 (Deloitte, EY, KPMG and PwC) have announced that they are reducing graduate recruitment and cutting hundreds of jobs because artificial intelligence (AI) is beginning to fill junior roles.
Graduate Jobs and the Rise of AI
Over that last two years it is estimated that the hiring of university graduates and school leavers has reduced by, in some cases, as much as 29%. For example KPMG cut its 2023 intake from 1,399 to 942, Deloitte by 18% and EY by 11%.
Research shows that graduate job adverts in accountancy are down 44% year on year – which is at a higher rate than the reduction in overall graduate job listings.
This is, partly, a protective measure as firms are wanting to preserve partner income after a post COVID downturn in consultancy work coupled with pressure on client budgets and audit fees.
The use of the likes of ChatGPT to take on administrative work often performed by entry level staff is increasing because it can be more cost effective. In addition firms are offshoring more work to hubs in India, Malaysia and the Philippines.
Many of the Big 4 have operated, albeit tacitly, a ‘up or out policy’ that is most people who join don’t stay unless they become a partner or specialise in some way.
In some ways this new policy cuts the number of people who will be leaving, whilst, at the same time restricting the gene pool for future partners or directors. If the tendency is to recruit only in their own image there is a danger that Big 4 employees will lack the individuality and creativity which a wider recruitment might bring.
AI in Audit and Beyond
The increased use of AI is a sign of things to come. On the positive side firms have spotted that there is a new and potentially lucrative market by starting to develop AI auditing tools which verify the safety and performance of AI models - AI to audit the AI. This is in addition to the use of AI as part of the audit process in the use of data analytics to interrogate large volumes of data to distinguish patterns and anomalies for investigation.
Whilst the use of data analytics might be a well-trodden path extending AI into other areas of operation may run into snags. KPMG research shows that only 42% of people trust AI and almost 75% lack any formal training in it.
It should be remembered that AI is only as good as the individuals who programme it. Despite the hype AI, at the moment, is not capable of original thought – it is an assembler and interpreter of data and, as such, can be flawed.
There is a tendency for individuals to accept what is produced by a computer because it looks good, is neatly typed and has been produced by the computer but any accountant who has prepared an Excel spreadsheet which looks great but contains a massive error will tell you – looks can be deceptive.
Scare stories in the press and popular media of a soulless AI making harsh decisions may be a step too far but, in many ways, it is already here.
AI may take low level jobs but until it can spontaneously buy biscuits for the audit team it will have its limitations and people are right to be wary of it and the hype which surrounds it.
The ghost in the machine is a reality but isn’t ready to rule the world quite yet.
🧠 Curious about the role of AI in accounting? Explore our CPD courses on artificial intelligence.