EY cuts 148 jobs as consulting downturn deepens

Maxim ShanahanProfessional services reporter

Apr 16, 2024 – 4.00pm

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Consulting firm EY has made 148 positions redundant, telling staff on Tuesday that they have a week to find a new role within the firm or leave, as the professional services downturn deepens.

The firm told staff a downturn in consulting, triggered by the PwC tax leaks scandal, meant the redundancies, amounting to about 1 per cent of the local workforce, were required to protect the firm’s financial position.

The redundancies are the latest in a spate of job cuts to hit the consulting sector, which is confronting what industry insiders say is the longest and most sustained downturn in recent memory.

In a statement, EY Oceania chief executive David Larocca said the firm had made the “difficult decision that redundancies are required in some parts of the business, resulting in 148 of our people leaving EY”.

The redundancies are mostly across consulting and financial services – areas Mr Larocca said had been “particularly affected by the continued downturn in demand”.

Rival PwC made almost 5 per cent of its workforce redundant in March, and KPMG and Deloitte have also cut dozens of staff in the past year.

Internationally, McKinsey has also taken the rare step of cutting staff, and is offering some employees up to nine months’ pay to leave the firm because of the lack of work.

EY Oceania chief executive David Larocca.

EY had cut 232 jobs in November last year.

At the time, Mr Larocca had said he hoped consulting demand would return by the middle of this year.

But the latest move is a further sign the downturn in the advisory market is persisting. The big firms are facing depressed demand, a lack of trust and unprecedented government scrutiny as public and private sector clients increasingly direct work to firms outside the big four.

The redundancies affect the policy and finance teams, in particular, which have been the most exposed to deep declines in the demand for government and financial advisory work.

The fallout from the PwC tax leaks scandal has caused a dramatic drop in the use of consultants by federal and state governments.

Government spending on the big four fell more than 40 per cent between Q4 2022 and Q4 2023, according to AusTender data.

Private sector demand is also down, because of a decline in M&A activity and companies reducing or deferring their spending on external advisory services.

Career planning offered

The affected staff were informed of the news in online meetings with division heads on Tuesday morning, before meeting with individual partners to discuss the possibility of being redeployed elsewhere within the firm.

Mr Larocca said EY was “offering all the support we can” to the workers made redundant. “We thank them for their valuable contribution to the business and wish them the best for the next step in their career.”

Career management consultants Directioneering were available to staff from Tuesday afternoon.

Mr Larocca said the firm remained “absolutely committed” to implementing recommendations from the review led by former sex discrimination commissioner Elizabeth Broderick into its culture, which found that staff felt bullied, overworked and harassed by partners and senior management.

“This decision will in no way impact our focus on building a safe and inclusive workplace for all. We remain absolutely committed to … investing in our culture transformation,” Mr Larocca said.

Maxim Shanahan is a professional services reporter at the Australian Financial Review. Email Maxim at max.shanahan@nine.com.au