EY Australia layoffs amid slowing growth & industry challenges

• Another wave of layoffs at the Big 4 on the horizon? EY Australia has been facing a challenging business climate for accounting firms.
• And, seems like the fallout from the PwC Australia tax leaks scandal in 2023 has made it worse.
• With slowing growth, the firm is now planning to cut approximately 1% of its workforce.

EY Australia considers job cuts

EY Australia is assessing potential job cuts as part of “workforce adjustments” to navigate tough market conditions.

The firm acknowledged on Wednesday that it may implement targeted restructuring in certain areas to align with current demand.

Potential impact on jobs

EY has not confirmed the exact number of job cuts.

But, reports suggest about 100 roles in the technology consulting division may be affected, impacting 1% of the workforce.

Market expectations vs. reality

In a statement to Reuters, an EY Australia spokesperson revealed that the firm had anticipated a market rebound and sustained growth in FY25 for struggling parts of the business.

However, actual demand has not met these expectations, prompting a reassessment of workforce needs.

Industry-wide challenges

In 2024, the Big Four accounting firms—PwC, KPMG, Deloitte, and Ernst & Young (EY)—implemented significant layoffs across various regions:

PwC:

• In September 2024, PwC announced plans to lay off approximately 1,800 employees, representing about 2.5% of its U.S. workforce.
• This marked the firm’s first significant reduction since 2009, affecting roles across associates to managing directors, with nearly half of the cuts anticipated to impact offshore positions.

KPMG:

• In November 2024, KPMG disclosed plans to reduce its U.S. audit workforce by nearly 4%, equating to approximately 330 employees.
• This decision was attributed to lower-than-expected voluntary turnover rates, prompting the firm to align its workforce size with current market demands.

Deloitte:

• Facing a slowdown in demand for advisory services, Deloitte undertook workforce reductions, including the layoff of 250 employees in the UK.
• This marked the third round of layoffs within 13 months, reflecting a strategic response to shifting market conditions.

Ernst & Young (EY):

• In 2024, EY announced workforce cuts for the first time in 14 years.
• The reduction affected approximately 1,300 employees, representing about 2% of the global workforce.
• The move was a response to decreased demand in consulting services and the firm’s weakest revenue growth since 2010.

These layoffs underscore a broader trend within the professional services industry, as firms adapt to evolving market dynamics and reduced demand for certain advisory services.

Big 4s global performance in FY24

Speaking of which, the Big 4 accounting firms also experienced moderate revenue growth in FY24 (in US dollar terms):

• Deloitte saw the lowest growth at 3.1%, but remained the largest, with $67.2 billion in revenue
• PwC grew by 3.7%, hitting $55.4 billion
• EY followed with 3.9% growth, reporting $51.2 billion in revenue
• KPMG led with a 5.4% increase, reaching $38.4 billion

Wrapping up…

The broader accounting industry in Australia has faced turbulence since PwC Australia’s tax leaks scandal in mid-2023.

This intensified scrutiny on global firms and led to a tougher operating environment.

EY’s potential job cuts reflect the ongoing struggles within the sector as firms adapt to shifting market conditions.

FAQ

What is the PwC Australia Tax Scandal?

PwC Australia is embroiled in a major scandal after it was revealed that a senior partner, Peter Collins, leaked confidential government tax policy information to help clients—including Google, Uber, and Facebook—sidestep new tax laws.

What Happened? Between 2013 and 2018, Collins, while advising the Australian Treasury on tax avoidance laws, shared classified details.

PwC then used this intel to secure millions in fees from multinational clients.

How It Unfolded?

The Australian Taxation Office (ATO) noticed suspiciously fast tax restructuring among corporations after the laws were enacted.

Despite raising concerns, PwC resisted scrutiny by claiming legal privilege, which the courts later rejected.

The Fallout

• CEO Tom Seymour and eight partners resigned in 2023.
• PwC repaid nearly $1M for an undelivered government report.
• In November 2024, the Australian Federal Police raided PwC’s Sydney office in an ongoing criminal probe.

Bigger Picture

This scandal has rocked the consulting industry, raising serious questions about ethics, governance, and the unchecked power of global advisory firms.

What is Big 4 revenue and growth in India?

India’s Big 4 outpace global growth.

In contrast, the Indian divisions of these firms recorded significantly higher revenue increases.

According to estimates from The Economic Times, the combined revenue of the Big 4 in India for FY24 stood at Rs 38,500-Rs 38,800 crore.

• EY India: 16-17% growth, exceeding Rs 13,400 crore.
• Deloitte India: 29% growth, reaching Rs 10,000 crore (including HQ royalties).
• PwC India: 22% growth, climbing to Rs 9,200 crore.
• KPMG India: 5.5-10% growth, totaling Rs 5,900-Rs 6,200 crore.