By John Ikani
Professional services firm EY has announced plans to slash 3,000 jobs in the US, citing “overcapacity” as the main driver behind the move.
The bulk of the job cuts will reportedly be made in the company’s consulting arm, representing a larger percentage reduction than across the rest of the business.
EY’s announcement comes on the heels of the collapse of its much-hyped Project Everest, a plan to spin off its global consulting business into a standalone entity.
Executives behind the project had pitched it as a means of accelerating growth by enabling consultants to sell services to audit clients, but concerns about the strength of the audit-focused side of the business reportedly torpedoed the deal.
A spokesperson for EY has stated that the redundancies were necessitated by “overcapacity in parts of our firm”, as well as “assessing the impact of current economic conditions and strong employee retention rates”.
However, they stressed that the move was part of the company’s ongoing management strategy and not tied to Project Everest.
Economic conditions have been challenging for consulting businesses, which saw a period of growth during the pandemic as clients raced to upgrade their IT systems.
The end of the M&A boom has also impacted the industry’s deal advisory work, with interest rates now on the rise.
EY’s job cuts are deeper than those announced by other major consulting firms in recent months, with KPMG and Accenture both announcing smaller reductions in February, and McKinsey said to be cutting about 3% of its workforce.
In the UK, EY executives have also hinted at potential cost-cutting measures.
The Big Four accounting and consulting firms went on a hiring spree as they tried to cope with the high volume of work and increased staff departures caused by the pandemic.
However, they have since scaled back recruitment significantly, with the latest William Blair survey finding that Big Four job postings are now 62% lower than they were a year ago.
