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EY lays off US partners as demand slows

By Nithya Bose in US business news, posted December 13, 2023

Ernst & Young is terminating partners across its US operations, signaling a deeper cut than usual for the Big Four accounting firm.

This move comes in response to diminished demand for specific services and the aftermath of a failed plan to divide the firm.

The cuts primarily target the advisory sector, impacting over 10 percent of consulting partners and approximately four percent in strategy and transactions.

This impacts over 100 consulting partners and more than 30 strategy and transaction partners across various experience levels.

Affected partners started receiving notifications last week, with the process expected to continue throughout this week.

While annual cuts based on performance are not uncommon, the current downsizing exceeds the typical scale.

In April, EY let go of around 3,000 US employees, constituting less than five percent of its workforce, in an earlier cost-cutting measure.

Yang Shim, Head of Americas Technology Consulting at EY, said the cuts are strategically focused on areas with slowed growth and excess capacity.

The reduction encompasses partner-level layoffs and reductions in rank-and-file staff.

EY aims to navigate challenging economic conditions by aligning its workforce with areas of sustained demand.

The professional services industry, including accounting and consulting firms, is grappling with a slowdown in revenue growth.

Aggressive pandemic expansion

EY and other major firms like KPMG and Deloitte aggressively expanded during the pandemic to meet the increased demand for consulting services.

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However, the expected attrition has been slower than anticipated.

EY said the layoffs in the US impact a limited number of people.

A company spokesman in the US division said it postponed start dates for some new hires in certain areas.

The spokesman said: “These decisions have been thoughtfully made with respect and fairness for all of our people and the future of our business.

“EY will offer comprehensive support to those who are affected.”

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The firm is transforming long-term to align its focus with client needs, particularly in consulting and transactions.

Other industry players such as KPMG and Deloitte have also implemented layoffs.

EY has been actively seeking cost reductions and restructuring in the US after scrapping plans to separate auditing and consulting in April.

The firm recently proposed governance reforms to grant US partners more voting power in strategic decisions, as the US unit played a pivotal role in rejecting the split.

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