KPMG Australia is cutting nearly 400 jobs as it deals with the fallout from allegations that it misused confidential client information to secure business, while demand for consulting services continues to weaken.

The consultancy giant will cut about 5 per cent of its workforce, eliminating 360 employee positions and 27 partner roles across its consulting and business services divisions, according to a statement issued on Monday.

KPMG Australia’s total revenue fell 1 per cent to A$2.26 billion ($1.6 billion) in the year ended June.

Consulting revenue, the scandal-hit firm’s largest business segment, dropped 17 per cent to A$632 million, while average equity partner remuneration declined 13 per cent, the statement said.

“KPMG has reviewed its costs and future workforce needs in response to continued economic weakness, difficult market conditions and the impact of the firm’s conduct and whistleblower matters,” KPMG Australia said in the statement.

The firm, which serves more than 13,000 clients in the market, said it is streamlining parts of its organisational structure to build more integrated teams and better align its operations with KPMG’s global advisory services.

New Chief Executive Officer John Sams said he expects the challenging market conditions to persist, with economic growth likely to remain subdued until at least 2028. He also pointed to the growing impact of artificial intelligence, reduced government spending on consultants and the fallout from the ongoing scandal as additional pressures on the firm.

“We also recognise the challenges created by our own failings, and the work we must continue to do to rebuild trust,” he said.

Sams said several internal and external reviews are expected to be completed in the coming months, with their findings set to shape the next phase of KPMG Australia’s action plan.