[ad_1]
Ernst & Young (EY) is undertaking a significant round of partner layoffs, affecting various U.S. business segments, as the global accounting giant contends with diminishing demand for specific services and strives to streamline operations following the abandonment of its plan to split the firm, reported Wall Street Journal.
The extensive partner cuts are primarily concentrated in the advisory sector of the U.S.operation, impacting over 10% of partners in consulting and approximately 4% in strategy and transactions. However, the audit and tax arms are not immune, as sources reveal that more than 100 partners in consulting and over 30 partners in strategy and transactions, spanning both junior and senior levels, are affected.
Notifications to the impacted partners began last week and are expected to continue this week. While annual partner cuts are not uncommon due to performance evaluations, the current reductions surpass the typical scale. This move follows EY’s decision in April to lay off 3,000 U.S. employees, constituting less than 5% of its U.S. workforce.
EY, like other accounting and consulting firms, is grappling with a slowdown in revenue growth, prompting several firms to downsize their workforce. The surge in hiring during the pandemic to meet increased demand for consulting services has encountered a slower-than-expected attrition rate post-pandemic.
In response, EY has stated that the U.S. layoffs impact a “limited number of people.” The firm has also deferred start dates for some new hires in specific areas. A spokesperson for the U.S. unit emphasized that the decisions have been made thoughtfully, with respect and fairness, and comprehensive support will be offered to those affected.
“As part of our long-term planning, EY has been transforming our business to focus on the areas where our clients have the greatest needs,” added the spokesperson.
The professional-services industry, increasingly reliant on consulting revenue compared to audit, is witnessing cyclical challenges. Other major firms, including KPMG, Deloitte, and McKinsey, have also implemented workforce reductions in response to evolving market conditions.
EY’s Americas region, contributing nearly 48% to the firm’s $49.35 billion global revenue, reported $23.62 billion for the year ended June 30. While this represents a 12% increase from the prior fiscal year, it reflects a slowdown compared to the 19% growth in the preceding year.
The consulting and transactions businesses globally generated $22.17 billion, constituting approximately 45% of the total revenue. EY continues to explore cost-cutting measures and structural improvements in the U.S., following the decision to abandon the split between auditing and consulting.
Last month, the firm proposed governance reforms, seeking increased input from U.S. partners in strategic decisions. The U.S. unit played a pivotal role in the abandonment of the split, and voting on proposed changes is expected to conclude later this month. Janet Truncale, recently appointed as the new global chair effective July 2024, will lead EY’s efforts to move beyond the failed split.
The extensive partner cuts are primarily concentrated in the advisory sector of the U.S.operation, impacting over 10% of partners in consulting and approximately 4% in strategy and transactions. However, the audit and tax arms are not immune, as sources reveal that more than 100 partners in consulting and over 30 partners in strategy and transactions, spanning both junior and senior levels, are affected.
Notifications to the impacted partners began last week and are expected to continue this week. While annual partner cuts are not uncommon due to performance evaluations, the current reductions surpass the typical scale. This move follows EY’s decision in April to lay off 3,000 U.S. employees, constituting less than 5% of its U.S. workforce.
EY, like other accounting and consulting firms, is grappling with a slowdown in revenue growth, prompting several firms to downsize their workforce. The surge in hiring during the pandemic to meet increased demand for consulting services has encountered a slower-than-expected attrition rate post-pandemic.
In response, EY has stated that the U.S. layoffs impact a “limited number of people.” The firm has also deferred start dates for some new hires in specific areas. A spokesperson for the U.S. unit emphasized that the decisions have been made thoughtfully, with respect and fairness, and comprehensive support will be offered to those affected.
“As part of our long-term planning, EY has been transforming our business to focus on the areas where our clients have the greatest needs,” added the spokesperson.
The professional-services industry, increasingly reliant on consulting revenue compared to audit, is witnessing cyclical challenges. Other major firms, including KPMG, Deloitte, and McKinsey, have also implemented workforce reductions in response to evolving market conditions.
EY’s Americas region, contributing nearly 48% to the firm’s $49.35 billion global revenue, reported $23.62 billion for the year ended June 30. While this represents a 12% increase from the prior fiscal year, it reflects a slowdown compared to the 19% growth in the preceding year.
The consulting and transactions businesses globally generated $22.17 billion, constituting approximately 45% of the total revenue. EY continues to explore cost-cutting measures and structural improvements in the U.S., following the decision to abandon the split between auditing and consulting.
Last month, the firm proposed governance reforms, seeking increased input from U.S. partners in strategic decisions. The U.S. unit played a pivotal role in the abandonment of the split, and voting on proposed changes is expected to conclude later this month. Janet Truncale, recently appointed as the new global chair effective July 2024, will lead EY’s efforts to move beyond the failed split.
#initiates #unprecedented #partner #layoffs #industry #slowdown
