Less than a week after abandoning its plan to split itself into separate audit and consulting businesses, EY has told staff it will cut 3,000 jobs in the United States to eliminate “overcapacity”.
The redundancies, which will fall mainly on the consulting side of the firm, account for 5 per cent of its American workforce, although the percentage reductions will be higher in the affected businesses.
“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 told the Financial Times. “These actions are part of the ongoing management of our business and not a result of the recently concluded strategic review . . . Project Everest.”
EY’s plan was to separate the audit and consulting businesses to free both from conflicts of interest, allowing them to bid for work with companies that had been out of bounds. Its consultants had wanted to pitch for contracts with big technology companies but could not because their colleagues in audit signed off the firms’ accounts.
Carmine Di Sibio, global chairman of EY, who led the push for change, reckoned the consulting division could win $10 billion in extra fees if it were freed from the audit business. His plan was ditched after partners in America decided they would not back it.
Big four accounting firm EY to shed 3,000 US jobs to cut ‘overcapacity’