Save content
Have you found this content useful? Use the button above to save it to your profile.
 EY sign is seen at the entrance to the professional services network Ernst & Young Global Limited's office in San Jose, California
istock_EY_hapabapa

EY plans to cut 3,000 jobs in the US

by

Less than a week after the collapse of plans to break up its audit and consulting arms, EY US has said it will lay off 3,000 employees due to tough US economic conditions and “overcapacity”.

18th Apr 2023
Save content
Have you found this content useful? Use the button above to save it to your profile.

EY said on Monday it was cutting 5% of its workforce in the United States, which will affect around 3,000 of the company’s US employees.

“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. 

“We have approached this decision with the utmost care, respect and consideration, and EY will offer comprehensive support to those who are affected.”

EY UK has said: “The announcement is specific to EY in the US. There are no similar plans in the UK.”

However, the Financial Times reported last week that EY UK’s managing partner warned partners on a call that they will be addressing “inefficiencies” in the business and “we are already working on reducing our costs”.

Mountain to climb

The announcement comes days after EY abandoned plans to split the organisation into two separate audit and consulting businesses, dubbed internally as Project Everest, following pushback from US executives. 

Shortly after the announcement EY US executives said it was going to roll out a $500m cost-saving programme. However, the redundancies are not a result of the “recently concluded strategic review” known as Project Everest but are “part of the ongoing management” of the business. 

The Financial Times reported that internal costs for work done by EY staff for the project are said to have reached $300m, with the UK arm incurring an extra £10m in costs. However, the costs will be somewhat counterbalanced by the $400m in savings the company has made by delaying other projects. 

US downturn

EY’s decision to shed jobs comes as corporate America is bracing itself for an impending recession or at the least a softening of the economy. 

The US Federal Reserve has taken a similar approach to tackling inflation as the Bank of England and has consistently raised interest rates. The cooling of the US economy comes after the collapse of Silicon Valley bank

EY isn’t the only Big Four firm stateside to shed a huge number of their workforce either. KPMG became the first of the Big Four firms to let staff go, cutting 2% of its US staff in February citing similar economic conditions in the US. 

​A KPMG spokesperson told Reuters earlier this year​ that although the firm’s business and outlook looked strong, it has ​​“experienced prolonged uncertainty affecting certain parts of our advisory business that drove outsized growth in recent years”.​

However, the cuts at EY US go much further at 5% than those announced at KPMG, which affected around 700 employees. 

Prior to Monday’s announcement, EY had attempted a softer approach to cost cutting by axing holiday bonuses for US staff and took a step back on its hiring. Again, the Big Four firm attributed this to the external environment. 

Similar cuts are being made at tech giant Accenture, which has also announced plans to let go 19,000 people over an 18-month period, while global consulting firm McKinsey announced in February that it will cut 2,000 back-office staff.  

Tags:

Replies (1)

Please login or register to join the discussion.

avatar
By Hugo Fair
18th Apr 2023 13:43

Redundancies
... or as apparently they prefer to say ... lay off / cut / shed jobs / let go / axing - and all as part of 'addressing inefficiencies' via a 'cost-saving programme' (with no mention of how those responsible for such inefficiencies, by "driving outsized growth in recent years", were created by those who have benefitted from increased bonuses and yet now retain their jobs).

But my award for the most innovative (and obscure) description is "the difficult business decision to separate approximately 3,000 US employees".
'Separate'? What from what? It sounds like something said by Henry VIII to an about to be ex-wife!

Thanks (3)