'Big Four' hiring decline: Ernst & Young blames 'overcapacity' for 3,000 job cuts

Ernst & Young informed its workforce that it would be cutting 3,000 jobs in the United States. The London-headquartered financial services giant, one among the 'big four', is reportedly executing the job cutsto eliminate "overcapacity."

The cuts were announced less than a week after the collapse of Project Everest, a proposed plan to spin off EY’s global consulting business into a new company.Project Everestconsumed more than a year of work and cost EY more than $600mn, executives told company's staff last week.

Ernst & Young layoffs: Who will be affected?

According to Financial Times, the consulting side of the firm will be most-affected during EY's job-cuts.

The job cuts willaccount for about 5 per cent of EY’s US workforce.

"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," an EY spokesperson was quoted as saying by Financial Times.

"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," the spokesperson added.

Ernst & Young job cuts: Biggest layoff in the sector

Among its competitors such as the KMPG, Accenture and McKinsey, EY's job cuts are deeper than others.

KPMG laid off close to 2 per cent of its US staff in February.

Accenture has announced it would cut 2.6 per cent of its global workforce over the next 18 months.

McKinsey'srestructuring will reduce about 3 per cent of its workforce.

ALSO WATCH |German watchdog bans EY from taking on new audits for two years

Consulting businesses have slowed sharply due to rise in interest rates among other related factors.

Earlier, EY hadaxed holiday bonuses for its US staff, citing the slowing economy. The firms in the sector have sharply slowed hiring.

Job postings by the 'Big Four' (Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers) are 50 per cent lower than a year ago, according to the latest monthly survey by William Blair, an equity research firm.

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