Accounting firm EY to cut 3000 staff in US a week after Project Everest collapses

One of the world’s largest accounting firms has slashed 3000 jobs abroad after a bold plan to split the company failed, leaving them at “overcapacity”.

One of the world’s largest accounting firms has slashed 3000 jobs abroad after a bold plan to split the company failed, leaving them at “overcapacity”.

Earlier this year, big four accounting firm Ernst and Young (EY) announced it planned to split its consulting and auditing arms in half so that clients could utilise both branches in a move called Project Everest.

But last week, those plans abruptly fell apart.

On Monday local time (Tuesday morning AEDT), the US arm of EY announced lay-offs are on the way.

Around 3000 American consultants will be made redundant, representing about 5 per cent of the work force.

EY said the cuts had nothing to do with the timing of Project Everest’s collapse and was instead “part of the ongoing management of our business”.

Project Everest was officially canned last week. Picture: Gabriel Bouys/AFP

In a statement, EY said: “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 3000 US employees.”

According to Bloomberg, EY’s US business is its most profitable arm, generating 40 per cent of the global revenue and with 50,000 staff members.

Accounting and consulting firms like EY have been known to slash roles a few months out from the end of the financial year in June. It’s unclear if these cuts are part of that, or if more will be added on top.

EY has headquarters in the UK and offices across the world, including in Australia.

It’s unclear if the UK or Australian arm of the business will follow suit with the lay-offs.

A number of consulting firms have been gutted in recent weeks as turbulent market conditions have made companies rethink their headcounts.

3000 American staff are losing their jobs. Picture: ChrisPavlich/The Australian

Management consulting firm McKinsey is terminating 1400 workers as demand dries up.

The total cuts will amount to about 3 per cent of the global headcount.

Around 20 Australians are expected to be impacted.

McKinsey reportedly has 47,000 employees, up from 2012 when it had less than half that, at 17,000.

News.com.au revealed at the end of March that engineering and advisory company Aurecon was “regrettably” laying off 70 Australians due to a “change in demand for services”.

Also that month, tech consulting firm Accenture revealed it would slash 19,000 jobs including some in Australia.

Accenture’s cuts will impact 2.5 per cent of its global workforce as it anticipates lower demand for its services.

Half of the jobs expected to be impacted are back office roles with cuts expected to take place over the next 18 months.

Accenture’s cost cutting exercise is expected to slug the firm $US1.5 billion ($A2.2 billion) in charges associated with the cost cutting, including “$US1.2 billion ($A1.8 billion) of employee severance and other personnel costs” and another “$US300 million ($A447.5 million) of costs related to the consolidation of office space”.

There’s also consulting giant KPMG, which will eliminate roughly 700 roles in the US, equivalent to 2 per cent of its overall headcount.

About 200 KPMG jobs are expected to go in Australia.