👉 Background: EY, formerly known as Ernst & Young, is one of the global Big Four professional service giants. It does everything from accounting to tax to consulting and even dabbles in law and tech — aka the swiss army knife of the corporate world. It’s the third largest globally, based on revenue, and the second largest in Australia - thanks to PwC’s big fall.

👉 What happened: Even the mighty and powerful professional services firms are feeling the pain right now as EY has announced it will cut about 100 staff from its consulting arm because of a slowdown in the advisory market. And while these 100 jobs are about 1% of its Australian workforce, it also cut 500 jobs last year as well.

👉 What else: One of the biggest challenges for EY and co is the pullback of government spending on consulting services.

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‍What's the key learning?

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‍💡When governments bring work in-house, consultants feel the pain. In professional services, government contracts are often the cash cow — they’re lucrative, often long-term and have been considered pretty reliable.

💡But when the tide turns, it can devastate the industry. And that’s exactly what has happened over the past few years. Get this: government spending on consulting services dropped by $624 million in FY24 alone, or $84 million less each month compared to two years ago.

💡It’s a timely little reminder that a heavy reliance on government contracts can be a double-edged sword. Great in boom times but brutal when the policy changes.