EY to lay off 3,000 workers after split craters

Dive Brief:

Ernst & Young is planning to cut around 3,000 jobs from its U.S. workforce as it pivots to address shifts in demand and “overcapacity” in sections of its business, the Big Four accounting firm announced Monday.
“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,” EY said in a statement to CFO Dive.
The accounting giant’s U.S. arm — which generates more than 40% of the firm’s global revenue and employs about 50,000 professionals — recently abandoned a plan known as “Project Everest,” which would break up its consulting and auditing arms into two separate entities.

Dive Insight:

Last week “Project Everest”, which was originally announced in September, hit a wall after the company’s U.S. executive committee decided to not move forward with the division.

The company stated that the decision to slash its workforce was not a result of the halted split.

“To be clear, these actions are part of the ongoing management of our business and not a result of the recently concluded strategic review, known as Project Everest. We remain focused on our people, delivering innovative and forward-thinking approaches to our clients, and an industry-leading commitment to quality,” they said in the statement.

The proposed deal cost EY more than $100 million and drew backlash from U.S. audit leaders who claimed the consulting business was getting most of the company’s tax business, CFO Dive previously reported.

As deal flow has declined, the consulting industry has faced headwinds, with a rising number of firms slashing jobs.

In February, one of EY’s main competitors, KPMG, also announced layoffs, reportedly the first Big Four firm to do so. The New York-based KPMG U.S. said it was laying off nearly 700 staff members in the advisory side of its business, or close to 2% of its total workforce, CFO Dive previously reported. Last month McKinsey & Co. also announced layoffs, saying it would eliminate 1,400 positions. Accenture Plc also said it would cut 19,000 jobs, Bloomberg recently reported.