EY: EY layoffs begin July 1: Middle managers at risk as firm reduces global regions

EY is set to undergo a major restructuring, cutting middle management positions and consolidating its 18 regional divisions into 10 "super regions." The move, revealed exclusively by Financial News marks a significant shift in the firm's global operations. EY partners were informed of the changes on March 28, with the new structure and leadership set to take effect from July 1. The restructuring is aimed at streamlining the organization and enhancing global integration. Julie Boland, head of EY US, will lead one of the new super regions encompassing the US, Latin America, and Israel. Other regional consolidations are expected to follow a similar model. In addition to geographic restructuring, EY plans to eliminate layers of middle management, reducing the responsibilities of its three major geographic units-Americas; Europe, Middle East, India, and Africa (EMEIA); and Asia-Pacific. The mid-level executives affected by these cuts may either retire or compete for senior positions in the new structure, according to insiders. While the exact number of job cuts remains unclear, sources suggest that reductions are likely to hit regions such as EMEIA particularly hard. The firm's spokesperson stated that EY aims to become "the most globally integrated professional services organization in the world," adding that the restructuring will enable the company to deliver "seamless, comprehensive, and connected client services, drive future-focused investment, and accelerate growth." The overhaul follows a reorganization last year, in which EY reduced its industry sector groups from eight to six. Now, the company is pushing further with aggressive cost-cutting measures. The restructuring comes months after EY abandoned its proposed breakup plan, known as Project Everest. The failed attempt to split its consulting business from its auditing arm provided valuable insights into inefficiencies within the organization. One EY partner noted, "The firm is learning the lessons from the failed IPO. We learned a lot of lessons. Testing ourselves against the market has given us the direction of travel on costs." The restructuring will not completely eliminate the firm's major geographic groupings, but their responsibilities will be reduced. More decision-making power will shift to individual countries and the global leadership team, leading to the thinning out of regional management layers. A former EY partner questioned the purpose of the existing geographic management layer, stating, "Are they looking over the shoulder of the countries, acting as a conduit from global to the countries, or something else?" Industry experts believe the failed split highlighted that power within EY lies with global leadership and national partnerships, rather than regional management. "In practice, the country still has the power and influence," said James O'Dowd, founder of professional services recruitment firm Patrick Morgan. EY is not the only Big Four firm undergoing significant restructuring and job cuts. The firm's UK and Ireland branches recently cut 30 partners and reduced its legal business, putting nearly 40 jobs at risk. Across Europe, performance pressures on partners have led to quiet exits without formal layoffs. The job cuts at EY are part of a broader trend across the Big Four, as the professional services sector struggles with a sluggish market. Fiona Czerniawska, CEO of research firm Source Global, warned that more job cuts are expected across the industry: "We should expect more job cuts [across the Big Four] in the UK and probably in Europe." KPMG and Deloitte are also reorganizing, with KPMG merging partnerships into larger geographic units and Deloitte reducing its major business lines from five to four. These changes are driven in part by cost-cutting measures and an increased push toward offshore consulting work. While EY's restructuring aims to enhance efficiency, some insiders worry that it could lead to internal distractions and a loss of autonomy for employees in merging units. Czerniawska pointed out that staff may feel disempowered by the changes: "You don't want to make people feel they can't take decisions, but they have to recognize the benefits of working in broader teams." An ex-senior partner at a rival firm warned of the risk of internal focus taking precedence over client engagement: "A risk with reorganizations is that energy and resources are focused internally instead of on pursuing clients. You spend 18 months looking inwards, not outwards." Despite the significant shake-up, some industry observers remain skeptical about the long-term impact. O'Dowd described the restructuring as "just rearranging the deckchairs," while one EY partner noted, "You have got to do more than shuffle people around, and I'm not convinced yet they have done that." As EY prepares to implement these changes in July, the industry will be closely watching whether this bold restructuring effort achieves its goal of improving efficiency and positioning the firm for future growth.