EY Restructures Global Divisions to Cut Costs

EY is overhauling its global structure in an effort to reduce expenses and address slowing growth. The firm plans to consolidate its 18 regional divisions into 10 and dissolve 3 overarching geographic groupings. Additionally, its financial services arm will lose its independent status and be integrated into these newly created regions. While the goal is to streamline operations, this restructuring is expected to impact partners and staff globally.

Currently, EY operates under a structure that includes key geographic areas such as the Americas, Asia-Pacific, and Europe, Middle East, India and Africa. As part of this shake-up, these overarching areas will be eliminated, and the existing 18 regional divisions will be merged. The Australian partnership, presently part of EY Oceania under the Asia-Pacific group, will also be affected as its regional structure is dissolved.

These changes could lead to job cuts, particularly in Asia-Pacific, where hundreds of roles may be at risk. Some affected partners may be reassigned to local positions, but uncertainty remains about the full impact. The restructuring comes at a time when major consulting firms, including EY's competitors, are facing sluggish market conditions and pressure to justify the value of their services.

This global overhaul follows EY's failed attempt to separate its consulting and audit practices, a move that incurred over $1 billion in costs before collapsing in 2023 due to internal conflicts. The decision to now integrate the financial services division into broader regional partnerships is seen as a way to consolidate profitability and simplify operations.

Accounting firms worldwide are adapting to a shifting business landscape, with economic pressures and government spending cuts affecting their advisory roles. In Australia, for example, recent budget measures have reduced spending on external consultants by $4.7 billion since 2022. EY has also faced internal challenges, including partner departures and ongoing staff layoffs.

With the restructuring set to take effect at the start of the next financial year, EY hopes the changes will enhance collaboration, drive investment and boost long-term growth. However, the move signals a major shift in how one of the world's largest professional services firms operates, leaving many employees and industry observers watching closely.

Source: Australian Financial Review, EY