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EY has pushed back start dates for new graduates hired for its elite strategy adviser Parthenon, as big accounting and consulting firms continue to wrestle with the effects of a business slowdown.
EY has told about 200 recruits who were due to start work at Parthenon in the US next month or in January that they will not be needed until the middle of next year, according to an internal message seen by the Financial Times.
On a call with staff, EY-Parthenon bosses blamed a disappointing market for mergers and acquisitions and private equity activity, meaning advisory revenue growth has been slower than expected since the start of the firm’s fiscal year in July, according to people familiar with the discussion.
The decision to push back start dates comes as other US firms are also struggling to predict demand for consulting services, which boomed during the coronavirus pandemic but has slowed sharply since. The Big Four — EY, PwC, KPMG and Deloitte — and specialist consultancies such as McKinsey are continuing to recruit graduates in their thousands in anticipation of an acceleration in growth, but they have largely kept starting salaries flat, according to student counsellors.
“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, who said the US consulting market was expected to have grown modestly overall in 2024.
“The green shoots are growing, but they are growing quite slowly,” she said. “When most firms look at their pipelines of future work, they’re very strong, but it’s taking longer for that work to come through.”
Many large consulting firms delayed start dates for new recruits who were hired last year, meaning they have only recently absorbed that cohort. EY-Parthenon twice pushed back start dates for its 2023 recruits.
EY said the decision to delay start dates for a second year running was made “after careful consideration of the current M&A environment and our business needs” and that it would “ensure that our new joiners have the quality and breadth of assignments to ensure a successful start and strong professional trajectory”.
The firm will provide stipends ranging from $12,000 to $35,000 to those affected, depending on their original start date and whether they are joining with an undergraduate degree or an MBA, according to a person familiar with the figures.
EY-Parthenon has also cut the number of slots for internships next summer, according to a person familiar with the matter, as it tries to bring its recruiting back into balance. Successful interns often get job offers for the following year.
Students expecting to graduate next year with bachelor’s degrees or MBAs are being offered starting salaries at the big consulting firms that are at the same level as the past two years, according to Namaan Mian, chief operating officer of Management Consulted, which coaches students through the recruitment process.
“There is strong enough demand for consulting roles that it is still heavily outweighing supply,” he said, meaning big firms do not feel the need to raise pay to attract students, particularly since starting salaries remain subdued in competing professions, such as banking or technology.
“I am not seeing any firm in the Big Four or [McKinsey, BCG and Bain] making the first move, although we will see if anyone blinks before the end of the year.”
Consulting firm bosses remain optimistic for a stronger year ahead. The number of M&A deals, a critical source of demand for advisory work, fell to a nine-year low globally in the first three quarters of 2024, but the re-emergence of some very large deals among multinationals pointed to a potential rebound in overall activity.
“We’re starting to see, with more clarity around the direction of interest rates, the potential for a lot more activity on the private equity side, where there’s an enormous amount of cash that’s investable,” said Paul Knopp, chief executive of KPMG US.
He said KPMG had not needed to defer start dates for new recruits this year and was increasing campus hiring to “calibrate to what we see as a strong economy in 2025”.