EY delays graduate hires as advisory business slows
Big Four firm pushes back start dates for strategy arm recruits, citing weak M&A market
Ernst & Young LLP, one of the Big Four accounting firms, is deferring the start dates for approximately 200 new graduates slated to join its elite strategy advisory arm, EY-Parthenon, in the United States. The move comes as the firm grapples with slower-than-expected revenue growth in its advisory business, attributed to a sluggish market for mergers and acquisitions and private equity activity.
According to reports in the Financial Times, the graduates, originally scheduled to begin work next month or in January, will now join the firm in mid-2024. This marks the second consecutive year EY has delayed start dates for new recruits, following similar actions with its 2023 cohort.
To mitigate the impact on affected graduates, EY will provide stipends ranging from $12,000 to $35,000, depending on the original start date and whether the recruit holds an undergraduate degree or an MBA.
The decision underscores the challenges facing the consulting industry as it navigates a post-pandemic landscape. After experiencing a boom during the COVID-19 crisis, demand for consulting services has sharply declined, leaving firms struggling to forecast future needs accurately.
“The second half of this year has been a bit less buoyant than people were hoping for,” said Fiona Czerniawska, chief executive of Source Global Research, a consulting sector analyst. She noted that while many firms have strong pipelines of future work, it’s taking longer for that work to materialize.
EY’s move aligns with broader industry trends. The Big Four firms — EY, PwC, KPMG, and Deloitte — along with specialist consultancies like McKinsey, continue to recruit graduates in large numbers, anticipating future growth. However, starting salaries have remained largely stagnant, according to student counselors.
The global M&A market has seen a significant downturn, with deal numbers falling to a nine-year low in the first three quarters of 2024. However, recent large deals among multinationals have sparked hope for a potential rebound in overall activity.
In addition to delaying start dates, EY-Parthenon has reduced the number of internship slots for next summer, aiming to recalibrate its recruiting pipeline. Successful interns often receive job offers for the following year.
Despite current challenges, some industry leaders remain optimistic about future prospects. Paul Knopp, chief executive of KPMG US, expressed confidence in a strong economy for 2025, citing potential increased activity in the private equity sector due to greater clarity around interest rates.
EY’s decision comes amid other headwinds for the consulting industry. In the UK, the Institute for Government has recommended reducing government dependence on management consultants, potentially affecting a significant source of revenue for major firms.
As the consulting landscape continues to evolve, firms like EY are carefully balancing their workforce to align with current market conditions while preparing for anticipated future growth. The industry’s ability to navigate these challenges may shape its trajectory in the coming years.
