EY cuts 3,000 US jobs, blaming ‘overcapacity’

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The EY logo seen in the center of Kiev, Ukraine

Accounting giant Ernst & Young is cutting 3,000 jobs in the US, citing “overcapacity” in parts of the company.

The announcement comes days after the company canceled plans to break up its audit and advisory divisions.

EY said the decision was unrelated to that review, but was “part of the ongoing management of the business.”

London-based EY said the cuts affect about 5 percent of the US workforce, and promised “comprehensive support” for those affected.

EY said it made the cuts “after assessing the impact of current economic conditions, strong employee retention rates and excess capacity in parts of our company.”

The move comes as US companies prepare for an economic downturn.

Rival KPMG has also reportedly announced job cuts in the US, while Accenture and McKinsey are among the big names to announce layoffs in recent months.

Accenture is cutting 19,000 jobs or roughly 2.5% of staff globally, while McKinsey is said to be cutting about 1,400 jobs or 3% of its staff.

The Financial Times, which first reported on the EY cuts, said they mainly affected the advisory side of the business.

The paper also reported that cost-cutting was being planned in the UK as a result of the failed break-up plan.

EY, one of the Big Four firms that dominate the accounting industry, has proposed the split as a way to address scrutiny by regulators about conflicts of interest between the audit and advisory arms.

But the plan was thwarted after US teams raised objections to how the detachment would be organized.

Monday’s announcement was “specific” to EY in the US, Rosanna Lander, the company’s head of public relations in the UK: “There are no similar plans in the UK,” she said.