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EY to cut 3,000 jobs in US due to ‘overcapacity’

By Nagasunder in US business news, posted April 18, 2023

The world's largest accounting firm, Ernst & Young (EY), is to cut 3,000 jobs in the US due to "overcapacity" inside the organisation.

The choice, according to EY, was "part of the ongoing management of the business" and had nothing to do with that evaluation.

About five percent of its US workers will be affected, according to London-based EY, which has pledged "comprehensive support" for anyone affected.

EY said it had made its cuts "after assessing the impact of current economic conditions, strong employee retention rates and overcapacity in parts of our firm".

Days before the announcement, the company decided against splitting up its auditing and consulting divisions.

Corporate America is preparing for an economic downturn at the time of the move.

According to reports, rival KPMG has also announced job losses in the US, while Accenture and McKinsey are only two of the well-known companies that have done so recently.

Accenture is eliminating 19,000 positions or around 2.5 percent of its global workforce, but McKinsey is reportedly laying off 1,400 positions, or about three percent of its workforce.

The Financial Times, which broke the news of the EY layoffs first, claimed they mostly affected the consulting arm of the company.

In addition, the newspaper said that cost-cutting measures are being considered in the UK due to the failure of the separation plan.

The split was proposed by EY, one of the four major companies that dominate the accounting sector, as a means of addressing regulatory concerns about conflicts of interest between the audit and consulting branches.

However, the proposal was abandoned when US teams objected to the way the breakup should be handled.

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Rosanna Lander, the firm's UK head of public relations, said Monday's announcement was "specific" to EY in the US, saying "There are no similar plans in the UK."

Source: BBC News