Now EY Is Talking About Mercilessly Consolidating Its Global Units

Posted on by Going Concern News Desk
EY logo on exterior of building

It’s not often we get to say Deloitte, EY, or PwC are following in KPMG’s footsteps but here we are. The phrase of the day is “global reorganization” and we should all be asking wtf is happening when two Big 4 firms are talking about doing it. In KPMG’s case, high level discussions are being had about merging together dozens of independent KPMG entities to “boost growth and prevent audit scandals” (per a FT source). In EY’s case, it appears the firm is planning to consolidate regions because business sucks.

Here’s what Australian Financial Review had to say about it:

EY will make sweeping changes to its global structure to cut costs and address stagnant growth, slashing the number of regional divisions and ending the independence of its financial services arm.

Under the restructure, EY will end three overarching geographic groupings and merge 18 regional structures into 10 so-called super regions. The financial services division will also lose its global independence and be folded into the new regions, according to multiple sources familiar with the plans who were not authorized to speak about internal firm operations.

According to what AFR was told, EY Australia’s home region of EY Oceania would be gone completely under this plan. EY’s three global regions of Americas, EMIA (Europe, Middle East, India and Africa), and Asia-Pacific (of which Oceania is currently a member) would be dissolved and affected partners potentially shuffled around. “[T]he restructure is likely to lead to further job cuts, including hundreds in the Asia-Pacific,” said AFR. Right. So partners get shuffled around, staff get shafted as usual.

In Bloomberg Tax‘s write up they say this huge reorganization is happening “to offer international clients more integrated services” and “to make it easier to offer clients cross-border services.” 👌

Anyone getting a really bad feeling about all of this?

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Apparently a Few People at PwC Are Feeling Shortchanged

The PricewaterhouseCoopers compensation post is still a hot thread, as the majority of news was about double-digit raises and bonuses have been reported from many although at least one commenter was skeptical that all the news was good in the PwC world:

“[P]robably the people most willing to share are the ones who got the most $.”


That comment was in response to someone who assumed PwC was throwing around “1” ratings (the firm’s highest) like boomies at a Phish show. Of course, not everyone can be so lucky and apparently there are a couple of terms being thrown around by the less fortunate.

Late last week a source close to PwC dropped us the following:

“Fonus”– noun; the much-diminished bonus Big 4 firms give to borderline staff they can’t afford to pay properly, but don’t want to quit.

Not to be confused with the ‘nonus,’ which is no bonus at all.

Apparently these terms have emerged this week as fonuses started appearing in people’s paychecks.

So not to worry “as expected” staff that can’t afford to quit your jobs! If you ended up with the 6%/0% instead of the 14%/10% or whatever, whathaveyou, you’re not alone! Plus, there are some fun terms you can throw around to help you bitch about it. Continue to discuss and keep us updated with any other fallout from the discussions – verbal creativeness or otherwise.

Jim Quigley Takes Exception with the Notion That Deloitte Isn’t the Biggest Firm in India

You don’t need to tell Jim Quigley that it’s only a matter of time before Deloitte is the largest accounting firm ON EARTH.

In a Q&A with India’s Business Standard, Quigs was asked about the shrinking gap and you better believe the man is all over it like a hard-hitting interview at Davos:


After five years, we have eliminated the gap. They were once $2 billion larger than us.

At $26.1 billion for FY ’09, Deloitte is all over PwC ($26.2 billion in FY ’09) for the Biggest of the Big 4 in terms of revenue. However, JQ was a little more defensive when asked about the firm’s presence in India.

But if one looks at India, the perception is that you are the smallest amongst the Big Four.
I think we are the largest in India when you look at the number of people. We have 12,000 Deloitte people in India and we are on our way to 20,000 people.

In other words, “Thanks for bringing that up but since India revenue isn’t known, head count is how we’ll measure this. And in that particular case, we’re the largest. Next question.”

But a lot of them are your [Business Process Outsourcing] employees at Hyderabad.
Yes, we have about 8,000 people there. And we are growing that towards 15,000. They are focused on serving the global market place.

We have the number one audit share in India. Our audit share of the listed companies is larger than any of the competitors. My goal is to go for balanced growth in India. I want to be one-third audit, one-third tax and one-third consulting. Growing the tax and consulting businesses is easier than it is to move the audit share because companies don’t change auditors often. The fact that we start with the largest audit share is a terrific foundation for us. My aspiration is that I want to be the absolute leader in professional services, especially in important emerging markets like India.

Translation: “Are BPO people not employees? Why wouldn’t we count them? And since we are counting them we’re going to double that number, FYI. Oh, and we have the biggest audit share in India and it we’ll eventually be biggest in everything so then they’re won’t be room for ‘debate’ (making the air quotes).”

In how many years?
In three to five years, I want to be the absolute leader here. I have more people here than anyone else today.

That is, “Deloitte numero uno by 2015! Did I mention that we have the most people here?”

Then the best part, comes a little later when Quigs gets the Satyam question:

How has Deloitte strengthened its internal controls after the Satyam scandal?
I don’t think you can say that if one firm has had an issue with Satyam, therefore all professional services firms have a problem.n the aftermath of that fraud, and it was a management fraud first, to make sure that we did not have comparable circumstances, we went back and reviewed our 50 largest audits. We challenged our partners and thinking. We were satisfied that we have completed procedures that will reduce to a relatively low level the risk that an undetected error could occur. Our commitment to quality is tireless. And that is what you want the market leader to be.

So it sounds as though Satyam will be NBD for Deloitte, unlike some firms. We know India is a fraud paradise so it wasn’t was their fault; they were duped. Deloitte is undupable.

‘Deloitte wants to be the absolute leader here’ [Business Standard]

10 thoughts on “Now EY Is Talking About Mercilessly Consolidating Its Global Units”

  1. This looks like “shuffling the deck chairs on the Titanic” to me.
    As I once read of consultants, when one doesn’t know how to help a client, he says, “reorganize”.
    How will E&Y get more clients no matter which E&Y unit signs the opinion, or does the tax work?
    Nothing good will come to E&Y’s people from this.

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  2. Restructuring basically has two effects: 1. You cannot compare the prior year financial performance with current year performance as segments have changed. 2. Job cuts (rightsizing) for plebs

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  4. I’m getting a very good feeling about this but then I don’t work for EY. The sooner we see the death of the Big 4 the better.

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  5. The low-information reader does not understand the consolidation discussion. Any firm must eliminate redundancies and trim back the excess fat. EY has a glutton of fat domestic and abroad that needs to be eliminated so the hard workers aren’t penalized, not to mention client fees.

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    1. Dude (Dudette?), yes EY has extraordinary amounts of fat, but don’t kid yourself that tripping it leads to hard workers not being penalized. Not only did the recent IT layoffs just mean more work for me, but my team lost two of my highest performers because they lived in the wrong countries (US and Singapore). And they worked plenty hard. But as one of them said, I’m done working hard to put another foot on a partner’s yacht. Don’t be naive, this is Big 4…either generate revenue or look over your shoulder.

  6. Is EY just having a rough couple of years? It seems to be in the news a lot lately and can’t tell if this is just a continuation of the Project Everest “success” or maybe I’m biased and focused on news about this Big4 versus the others….

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    1. Wow. You have worked for all national firms and know this as a fact. Hot commodity you must be!

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  8. Which financial services are affected? The audit teams in EY that audits banks is doing a good job and not come up in any scandals so far only in terms of auditing. So the article that mentions financial services is not clear or specific about which particular teams. Providing that information would be helpful. By the way I don’t work for EY but I have been following closely about them in the news.

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