As EY plots senior partner layoffs, what is next for the Big Four?
Over the last two years, the Big Four giants have been plagued by redundancies, but now the situation has escalated to the senior partnership.
Over the weekend, The Sunday Times revealed that dozens of senior partners were at risk of being laid off at EY, the most significant redundancy plan in decades.
EY currently has 894 equity partners and 757 non-equity partners, but the paper revealed the firm is expected to axe 30 partners, mainly in its consulting division.
In addition to those facing the chopping block, it was reported that some equity partners will have their positions converted into non-equity partners.
The news about EY follows PwC which recently made a record number of cuts to its partner ranks while pausing its tech apprenticeship scheme to protect partner profits.
What’s going on at the Big Four?
It is no secret that the Big Four firms have a profitability problem.
EY reported last October that its UK net revenue grew by a single-digit percentage over 2024, but fee income remained flat due to a reduction in significant cross-border transactions.
Deloitte UK’s revenue increased slightly by over two per cent, but its profit stalled.
PwC UK reported single-digit growth in revenue, but this came against the backdrop of the group’s profit and partner pay dropping again.
In January, KPMG UK revealed it recorded double-digit growth in profit before tax over 2024, but its revenue only increased by one per cent.
James O’Dowd, managing partner at Patrick Morgan, told CityAM that “after years of aggressive post-pandemic hiring, [Big Four firms] are now cutting jobs to protect partner profits and rebalance bloated teams.”
He noted that the consulting boom that followed the pandemic has slowed, and these firms now need to correct that over-hiring strategy.
Fiona Czerniawska, CEO of Source Global Research, explained to CityAM that the “relentless pace [of growth] slowed, partly due to the unfavourable macroeconomic and geopolitical backdrop.”
She added that the “firms have since found themselves with too many and too expensive people”.
In addition, these firms have focused on considerable investments in technology, including AI.
Czerniawska noted the aim is “firms will be able to grow and deliver more work, without recruiting evermore talent.”
Job losses mount
Over 900 roles were made redundant at the UK Big Four firms in 2024, and some 1,800 jobs were cut in 2023.
The latest moves by EY and PwC have piqued a lot of interest as they focus on the senior partnership level.
Partners manage the firm together, but the equity partners are the ones that own and pull their shares out of the profit pool.
O’Dowd explained: “A major source of frustration for high-performing partners has been the burden of carrying dozens of underperforming colleagues who have contributed little revenue over the past years while still drawing from the profit pool.”
“Many top performers feel their compensation is being diluted by those who do not generate revenue or drive growth, making these redundancies a necessary and inevitable step,” he added.
The firms have been trying to fix their career ladders for some time. Senior PwC staff in the UK, who will never make a partner, were offered ‘managing director’ roles last year.
The move behind the ‘managing director’ role is to keep senior talent engaged without touching the profit pool.
“This is a turning point for the Big Four,” O’Dowd stated, adding, “The old promise—work your way up and become a partner—no longer holds in the same way.”
“With fewer equity seats, alternative career paths emerging, and AI-driven disruption accelerating, the traditional firm structure is under pressure,” he added.
Despite the losses at the Big Four, the consultancy sector is expected to expand this year.
Tamzen Isacsson, chief executive of the Management Consultancies Association (MCA) noted: “We’re upbeat about growth prospects this year with forecast increases in revenue of 6.4 per cent in 2025 and 8.7 per cent in 2026, according to our latest independent research“.
“We’re seeing much more activity and opportunity in the market than this time last year,” Isacsson added.
However, MCA’s report in January 2024 said activity in the sector was predicted to return “to double digits growth in 2025 (11 per cent)”.