Ernst & Young (EY) announced it is laying off dozens of partners across all U.S. businesses as the accounting firm faces slowing demand for certain services and seeks to cut costs following its failed plan to break up the firm.
According to the Wall Street Journal, the cuts are largely concentrated on the advisory side of the U.S. operation, affecting more than 10% of partners in consulting and about 4% in strategy and transactions, but audit and tax arms are impacted, as well. That would equate to more than 100 partners in consulting and over 30 partners in strategy and transactions at both junior and senior levels.
EY began to inform affected partners last week, with notifications expected to continue this week. Some U.S. partners are cut annually due to unsatisfactory performance, but the cuts underway are larger than usual, sources told the WSJ. The cuts follow EY’s move in April to let go of 3,000 U.S. employees or under 5% of its U.S. workforce.
Yang Shim, EY’s head of Americas technology consulting, told staff on Monday that EY has chosen to make cuts in areas “where growth has notably slowed and where we have excess capacity,” according to a webcast reviewed by The Wall Street Journal.
Shim also noted that the cuts in his division included partner-level layoffs, as well as reductions in the number of rank-and-file staff.
Consulting demand tends to weaken or surge depending on the economy, whereas audit is a generally steady business line because of the reporting requirements for public companies, EY said. As consulting contributes to a growing share of these firms’ revenues compared with audit, the overall professional-services industry has grown more cyclical.
Tech Industry Layoffs
Less than a week after Broadcom finalized its $61 billion acquisition of VMware, layoffs began. This is a familiar pattern for the company, which followed a similar playbook with its acquisition of CA Technologies in 2018. Overall, it's estimated Broadcom will cut about 2,000 employees post-acquisition.
At the beginning of September, Rapid7 announced a restructuring plan following disappointing second-quarter results, resulting in the layoffs of about 18% of the company’s workforce.
Similarly, AppSec firm Snyk laid off 128 people in April. Cloud security vendor Zscaler announced layoffs after what it called a rough fiscal second quarter. Software tools giant Atlassian laid off 5% of its workforce as it “shifted priorities.”
Oxford, U.K.-based platform security vendor Sophos in January laid off 10% of its staff, or 450 workers, while San Francisco-based identity security giant Okta axed 5% of its workers – or roughly 300 employees in February.
Layoffs.fyi, a website that has documented tech company layoffs since the COVID-19 pandemic began, reported that approximately 242,000 employees have been laid off thus far in 2023.