EY US to cut 5% of workforce

EY US plans to cut 3,000 jobs mostly in its consulting division, the Financial Times reported on Monday.

The layoff announcement arrives less that a week after audit partners at the US firm blocked EY’s global split plan from moving forward. US auditors were concerned the spinout of the consulting business would leave the remaining audit business too weak – especially without a larger chunk of the tax consulting division.

EY spent over $600 million on the failed split plan, which was initiated to drive growth through the creation of independent accounting and consulting businesses that would no longer be hampered by conflict-of-interest regulations.

EY US told the Financial Times that the job cuts were not linked to the recent split process cancellation.

“After assessing the impact of current economic conditions, strong employee retention rates and overcapacity in parts of our firm, we have made the difficult business decision to separate approximately 3,000 US employees,” an EY spokesman said. “These actions are part of the ongoing management of our business and not a result of the recently concluded strategic review, known as Project Everest.”

The cuts are expected to fall largely on the consulting division. EY – alongside other major consultancies – went on a hiring spree during the post-pandemic economic rebound amid heated demand for IT and transactions consulting. Demand for both areas has cooled in recent months amid worsening economic conditions and high interest rates.

EY’s layoffs are about double the size of its peers. KPMG US was the first Big Four firm to announce cuts in its consulting business, laying off approximately 2% of its workforce in February. Accenture in March said it would cut 2.5% of its workforce, while McKinsey announced a cut of 3% of its employees, mostly falling on non-client-facing roles.