“Can AI drive growth even as jobs are lost?”
This is the question at the heart of Ernst & Young’s (EY) current strategy as the firm navigates economic uncertainty. While the company has made headlines for its recent layoffs, it’s also pouring resources into artificial intelligence—a move that reveals a strategic pivot toward technology even as it faces the complexities of workforce reduction.
As EY navigates a challenging period with 150 layoffs and strategic shifts in partnerships, the firm is also undergoing a major AI-driven transformation. This dual approach—cutting headcount while significantly enhancing AI capabilities—reflects the complex reality global organizations face today. EY has also ended relationships with several public companies to elevate the quality of its work. According to Ken Englund, head of EY’s Americas Technology Growth sector, AI is not merely a trend but a fundamental shift in business operations. Despite losing audit fees that exceed those of its Big Four peers by at least $130 million, EY is streamlining its workforce under new global chair Janet Truncale, who took on the role in July and ruled out plans to revive past split strategies.
“AI is going to be embedded in all digital tools,” Englund stated. “In three or four years, we won’t even talk about AI because it will be a given, seamlessly integrated into our work processes.” This sentiment underscores the urgency for workers to adapt now or risk being left behind.
Tech Sector Turmoil
The U.S. Bureau of Labor Statistics reported a concerning jobs report for July, with the tech sector facing unexpected challenges. Amidst this backdrop, EY conducted a pulse survey revealing that 50% of IT leaders anticipate that AI adoption will lead to a tumultuous period of hirings and firings throughout the fall. Despite these plans, 61% of tech leaders also reported difficulties in sourcing top talent, a challenge exacerbated by the rapid pace of technological advancements.
“We’re seeing a lot of new companies and startups, particularly in AI, software, and cloud,” Englund noted. “But these companies aren’t hiring as many people. The focus is shifting towards a more AI-savvy workforce.” This shift reflects the broader industry trend where companies are increasingly prioritizing AI skills over traditional roles, leading to a rebalancing of the workforce.
EY’s approach to this transition is twofold. On one hand, the company is standardizing its U.S. audit practices and building centralized audit support teams as part of a $1 billion investment in AI-enabled audit and tax platforms over the next three years. On the other hand, EY has launched the EY.ai Platform, a comprehensive AI initiative aimed at unifying human capabilities with AI to transform client businesses responsibly.
How AI can help create more strategic supply chains: https://t.co/mzWBVYtRZu pic.twitter.com/90uz5CxyDZ
— EY US (@EY_US) June 22, 2024
EY.ai
The EY.ai Platform is a cornerstone of EY’s strategy, backed by a $1.4 billion investment in AI. This platform integrates AI into EY’s proprietary technologies, including EY Fabric, which serves over 60,000 clients globally. The platform is not just about adopting AI; it’s about doing so responsibly and ethically. To this end, EY.ai includes several critical components:
- EY.ai Confidence Index: A tool that integrates ethical, societal, and public policy considerations, guiding organizations to deploy AI responsibly. It serves 60,000 clients globally. This strategic move isn’t just about technological enhancement; it’s about driving a responsible and ethical AI revolution. For instance, the Index weaves ethical, societal, and public policy considerations into AI deployment, ensuring that businesses can harness AI’s power without compromising on integrity.
- EY.ai Maturity Model: This model assesses an enterprise’s AI adoption level and identifies growth opportunities, helping businesses navigate their AI transformation journey.
- Generative AI Solutions: Developed in collaboration with partners like Microsoft and Dell Technologies, these solutions aim to enhance service offerings and simplify AI adoption.
EY’s Power Partnerships
EY’s journey into AI is bolstered by strategic partnerships with global tech leaders. Their collaboration with Microsoft, for instance, is pivotal in embedding AI—including generative AI (GenAI)—into core enterprise functions like finance, procurement, customer experience, and human resources. This partnership marries EY’s deep business and industry expertise with Microsoft’s cutting-edge AI and cloud solutions, resulting in enhanced decision-making and operational efficiency.
Amar Mehta, EY Industrials Strategy and Transactions Leader, EY LLP says, “In advanced industrials we are seeing two aspects of AI. One is around the cost structure side of the house and do you use AI and drive cost and productivity improvements and not just from taking cost out but really doing the work differently for enterprise functions like HR. We’re seeing on the growth side how does our customers and these industrial companies use AI to help their end customers?”
Similarly, EY’s expanded partnership with ServiceNow is focused on GenAI compliance, governance, and risk management. Together, they are crafting AI governance frameworks that transform risk management into tangible business value. ServiceNow’s Now Assist GenAI capabilities are being leveraged to enhance experiences for both EY professionals and clients, particularly in risk management solutions.
How Custom Solutions Are Shifting Industry Standards and Job Landscapes
EY is not just developing AI solutions; they are tailoring them to meet the unique needs of specific industries. In sectors like financial services, manufacturing, and life sciences, EY is deploying GenAI to drive innovation and operational efficiency. Their collaboration with Thomson Reuters, for example, is paving the way for AI-driven solutions in tax and legal services, combining rich content with cutting-edge insights to create new services and solutions that redefine industry standards.
“The thing I always hear is AI is not going to take your job,” Englund emphasized. “Somebody using AI will take your job.” This statement encapsulates the transformative impact of AI on the workforce. As AI becomes more integrated into business processes, the skills required to thrive in this new environment are changing rapidly.
EY’s AI initiatives are already delivering tangible results. For instance, in the insurance sector, EY has helped a Nordic company automate its claims processing, reducing manual effort and increasing efficiency. In the IT sector, EY’s AI solutions have enhanced vendor interaction experiences, leading to cost savings and improved governance.
The impact of generative AI is also evident in supply chain management. EY is exploring early use cases of GenAI, demonstrating its potential to deliver cost savings and streamline operations, particularly in complex industries like automotive and manufacturing.
“Organizations have traditionally used historical data to drive out costs. But with emerging technologies particularly AI we can move beyond historical views and start to incorporate product and consumer insights into our analysis. It’s the “jolt of caffeine” that really makes operations strategic to the enterprise.” says Lisa Caldwell, EY Americas Business Consulting Leader.
How AI can help create more strategic supply chains: https://t.co/mzWBVYtRZu pic.twitter.com/90uz5CxyDZ
— EY US (@EY_US) June 22, 2024
Upskilling and not Just a Technological Facade..
EY recognizes that the power of AI extends beyond technology—it transforms the workforce. Through initiatives like their AI-focused Tech MBA and bespoke AI learning programs, EY is upskilling its workforce to meet the demands of the future. Over 100,000 AI-related credentials have been awarded, signaling EY’s commitment to nurturing a new generation of AI-savvy professionals. EY’s internal AI-based tools like EY TalentMiner are streamlining the recruitment process, enhancing candidate experience, and optimizing hiring efficiency.
Generative AI is also playing a crucial role in workforce development. EY is using GenAI tools to identify training opportunities and assess skills gaps, ensuring that their employees are equipped to thrive in an AI-driven world. This includes using AI to automate data analysis, providing insights that drive continuous improvement in employee performance and development.
Cybersecurity, Upskilling, and Trust in the Age of AI
Despite the promising advancements in AI, the road ahead is not without its challenges. EY’s pulse poll highlighted ongoing concerns around AI adoption, including cybersecurity, privacy, and intellectual property. These issues are particularly pressing as organizations increasingly rely on AI to drive business value.
“The excitement around AI is contagious. As organizations build it into their business prophecies there is an expectation that they really have a strong grasp of design but more importantly continuous monitoring. That’s going to drive trust and credibility” said Kapish Vanvaria, EY Americas Risk Markets Leader.
Moreover, the need for upskilling and reskilling has never been more critical. Englund pointed out that while AI offers significant benefits, it also requires a workforce that is equipped to harness its potential. “Two-thirds of companies have some sort of reskilling or upskilling program,” he said. “This isn’t about out with the old and in with the new. It’s about rebalancing the workforce, with a focus on retaining existing employees.”
How AI Will Soon Be Everywhere in Business
Looking ahead, Englund predicts that AI will continue to evolve, becoming an integral part of all business operations. He foresees a future where AI is not discussed as a separate entity but is embedded in everything from marketing automation software to enterprise resource planning (ERP) platforms. “We’re going to get to a point where it just is,” he said.
This future vision aligns with the broader industry trend towards models of models, where multiple AI models are used in tandem to address specific use cases specially around the energy industry.
“What’s not commonly known is the energy industry is actually a very innovative sector. Its the same adoption style with AI. We’re working with clients right now to see what are the use cases to apply AI to solve some of the most critical problems.” – Bruce On, EY US Strategy and Transactions Principal, EY LLP
The recent acquisition of Nuvalence, a technology consultancy, is a testament to EY’s commitment to expanding its digital engineering and GenAI capabilities. With over 140 engineers, product managers, and architects joining the EY team, the firm is poised to lead the next wave of AI innovation, delivering AI-enabled platform services that empower clients to reimagine their business models.
[NEWS] Nuvalence joins EY US to accelerate the delivery of platform engineering, product development and generative AI platform-enabled services to organizations across industries and sectors. https://t.co/z0DZjSgQXR pic.twitter.com/grhMXwFp48
— EY US (@EY_US) April 29, 2024
Internally, EY’s deployment of conversational AI across its 400,000-strong workforce is driving a 15-20% uplift in productivity. This is particularly evident in vendor onboarding processes, where AI has increased productivity by 70-80%, significantly reducing the time and effort required to analyze vast amounts of documentation.
In the broader market, EY’s research on generative AI highlights its growing importance among global CEOs. Nearly all of the 1,200 CEOs surveyed by EY in October 2023 reported making or planning significant investments in GenAI, with 75% of senior executives predicting a significant boost in employee productivity as a result.
The stakes are higher than ever as EY tries to strike a balance between a big AI makeover and labour reductions. Their operations are being reshaped by this strategic change, which is also creating new standards for professional services. The result is starting to take shape; might this be the turning point where industry standards are redefined?
As Jonathan Sears, EY Global People Advisory Services Technology Leader said, “The value of AI isn’t technology itself, it’s in what people accomplish with it.”
