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EY cuts 148 staff citing low consulting, financial services demand

Business

The announcement is the latest in a string of industry-wide layoffs following the PwC tax leaks scandal and broader economic pressures.

By Nick Wilson 11 minute read

On Tuesday morning, EY Oceania informed 148 mostly consulting and financial services staff members they were being made redundant.

Oceania CEO David Larocca said the "difficult decision" was driven by a “continued downturn in demand” particularly across consulting and financial services.

In November last year, the firm cut 232 staff from its headcount, citing similar market pressures. Then, the lion’s share of the redundancies came from the firm’s financial services team.

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In a statement released at the time of those redundancies last year, Larocca said he forecasted the reduced demand to “be felt for most, if not all, of this financial year.”

Rumours of the layoffs have been circulating for some time, and a spokesperson last week informed Accounting Times the firm would not comment on the workforce changes before they were communicated to its employees.

The nation’s largest consulting firms are still reeling from the PwC tax leaks scandal, substantially affecting their ability to contract with government entities.

George Beaton, executive chairman at Beaton Research and Consulting, today shared insights in The Australian Financial Review from a survey that reportedly found the standing of big four consulting firms to have taken a major hit among government clients.

In the 20-year history of the survey series, Beaton said this year saw the big four firms to have “fallen out of favour for the majority of government clients.”

Fifty-seven per cent of government client respondents said they would not consider contacting a big four firm in the future.

Last year, the figure was as low as 43 per cent. Those government clients, said Beaton, are now considering “next four” firms BDO, Grant Thornton, Pitcher Partners, and RSM.

Perhaps more troubling, research suggests private sector clients too have lost faith in big four firms.

According to Beaton, 54 per cent of smaller clients reported a big four firm as their primary adviser early last year. In under a year, this figure has more than halved to 26 per cent.

The layoffs are not limited to Australia. EY’s US business sacked 300 staff nationally in April last year and announced further cuts in December.

But neither are they limited to EY. In March, PwC Australia cut 366 staff, including up to 37 partners which CEO Kevin Burrowes said was part of a new, "long-term strategy" resulting from a "challenging and complex process."

Also in March, Deloitte Australia announced a major restructure with a “small number” of attendant redundancies while KPMG Australia did away with approximately 200 roles early last year.

In reference to Tuesday’s announcement, Larocca said the decision will “in no way impact our focus on building a safe and inclusive workplace for all.”

“We remain absolutely committed to delivering on all the recommendation of the Elizabeth Broderick & Co report, and to investing in our culture transformation.”

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