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Political factors
Geopolitical instability and trade fragmentation
The shift to a multipolar world is driving trade fragmentation that complicates cross-border service delivery for firms like EY; global trade tensions rose as world merchandise trade volume fell 0.1% in 2024 after sluggish growth, increasing demand for geopolitical risk advisory. Rising protectionism—over 1,200 trade-restrictive measures active by end-2024—and regional conflicts force EY to advise clients on supply-chain disruption mitigation and scenario planning. EY must balance its 700+ office global footprint with localized strategies to stay resilient amid sudden shifts in international relations.
Evolution of international tax cooperation
The OECD Pillar Two rollout, setting a 15% global minimum tax effective 2023–24, has driven a roughly 20–30% uptick in demand for EY’s tax advisory and compliance work as multinationals adapt to new liabilities and top-up calculations.
Heightened government cooperation—over 140 jurisdictions committed to Pillar Two—forces firms to revamp reporting and IT systems, increasing spend on tax transformation projects by billions globally.
EY is positioned to guide clients through these shifts, delivering advisory, compliance and transparency solutions that align with evolving disclosure and anti–base erosion measures.
Increased government outsourcing and public sector consulting
Governments increasingly outsource modernization and digital transformation to firms like EY, with global public IT spending rising to an estimated $1.6 trillion in 2024 and healthcare/digital ID projects drawing multi‑billion state investments; EY’s public sector practice captures significant contracts in healthcare, defense and identity programs but faces heightened scrutiny—recently, 2023–2024 audits and inquiries led to reputational and contract risk tied to taxpayer fund accountability.
Nationalistic policies impacting talent mobility
Stricter immigration policies and nationalistic labor rules in markets like the US, UK and EU—where work visa approvals fell by ~12% in 2023—can restrict EY’s cross-border deployment of specialists, raising project staffing costs and timelines.
As a global firm dependent on fluid talent for diverse international engagements, EY must navigate visa caps, local hiring quotas and compliance costs to preserve expertise for complex advisory and assurance work; failure risks delayed delivery and higher subcontracting spend.
- Visa approvals down ~12% in 2023
- Increased local-hire mandates raise operational costs
- Risk: delayed projects, higher subcontracting spend
Regulatory shifts following global election cycles
The 2024–2025 election cycle produced policy shifts: notable examples include the EU revising corporate sustainability reporting rules in 2024 affecting ~50,000 companies and the US 2025 administration proposing a 15% minimum global tax enforcement increase impacting multinationals' effective tax rates.
EY must translate governance, climate and trade changes into compliance and advisory services to help clients navigate revised reporting, carbon pricing signals and supply‑chain tariffs.
- ~50,000 companies affected by EU CSRD updates (2024)
- Proposed 15% global minimum tax enforcement increase (2025)
- Rising carbon pricing and new trade tariffs shifting supply‑chain costs
Geopolitical fragmentation fuels EY advisory surge as tax, public IT & staffing risks rise
Political fragmentation and protectionism (1,200+ trade measures end‑2024) raise demand for EY’s geopolitical, tax and supply‑chain advisory; Pillar Two (15% minimum tax, effective 2023–24) boosted EY’s tax work ~20–30%; public IT spend hit ~$1.6T in 2024, creating large public sector opportunities amid reputational scrutiny; visa approvals fell ~12% in 2023, increasing staffing costs and delivery risk.
| Indicator | Value |
|---|---|
| Trade‑restrictive measures (end‑2024) | 1,200+ |
| Pillar Two impact on demand | +20–30% |
| Global public IT spend (2024) | $1.6T |
| Visa approvals change (2023) | −12% |
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Economic factors
Recovery of the global M&A and IPO market
As central banks stabilized rates toward late 2025, global M&A value rose 22% year‑over‑year to about $2.1 trillion and IPO proceeds climbed 35% to $92 billion, reviving deal appetite.
EY Strategy and Transactions is positioned to capture this uplift, scaling valuation and due diligence teams to serve higher cross‑border deal flow.
The economic rebound is driving material revenue upside versus the muted 2022–2024 period, with advisory fees in the sector rising an estimated 18% industrywide.
Impact of sustained interest rates on corporate spending
Stabilized policy rates near 4.5–5% in 2024–25 have shifted corporate focus from expansion to capital preservation, prompting record Q4 2024 corporate bond refinancing activity and a 12% rise in covenant renegotiations; discretionary consulting budgets fell ~8% YoY, with clients favoring initiatives delivering immediate cash savings or 15%+ ROI. EY must quantify cost-savings and trackable operational KPIs to win multi-year contracts in this disciplined spend environment.
Growth opportunities in emerging markets
Economic expansion in Southeast Asia, India, and parts of Africa offers EY growth outside Western markets; ASEAN GDP grew about 5% in 2024, India ~6.8% (2024 IMF), and Sub-Saharan Africa ~3.5% (2024 WB), expanding demand for professional services.
Rising middle-class consumption—projected 400 million new middle-class members in Asia by 2030—and a surge in startups (India saw 1,500+ unicorns’ ecosystem growth catalysts by 2024) drive needs for audit, tax, and advisory.
To capture share, EY must invest in local partnerships and localized service models; localized hires and joint ventures increased revenue penetration for peers by 10–20% in similar market-entry cases in 2023–24.
Inflationary pressures on professional service wages
Persistent wage inflation in professional services is squeezing EY’s margins; global salary growth for consulting roles rose about 6-8% in 2024, while inflation remained around 4-5% in major markets, increasing payroll costs across audit, advisory and tax.
To compete for data scientists and specialized tax experts, EY must offer packages reflecting higher living costs—total compensation premiums of 10-20% versus five years ago in leading hubs like London and New York.
Leadership must balance passing some labor costs to clients without losing competitiveness; utilization and pricing pressures mean margin compression risk of several hundred basis points if wage rises persist.
- 2024 salary growth in consulting: ~6-8%
- Compensation premium for specialists: ~10-20%
- Inflation in key markets: ~4-5% (2024)
- Potential margin hit: several hundred basis points
Shift toward value-based pricing models
Consulting is shifting from hourly billing to value-based pricing, with 46% of buyers in a 2024 Deloitte survey preferring outcome-linked fees and 32% of engagements in 2025 including some performance element.
Clients demand accountability and pay for measurable results; EY is revising commercial models to include KPIs, robust performance tracking, and risk-sharing contracts to protect margins.
- 46% of buyers prefer outcome-linked fees (2024 Deloitte)
- 32% of engagements included performance elements (2025)
- EY adopting KPI-based contracts and risk-sharing to align incentives
Global deal surge: 2025 M&A $2.1T, IPOs $92B; fees and pay climb amid regional growth
Global deal activity rebounded: 2025 M&A $2.1T (+22% YoY), IPOs $92B (+35%); advisory fees +18% vs 2022–24. Regional growth: ASEAN GDP ~5% (2024), India 6.8% (IMF 2024), SSA 3.5% (WB 2024). Consulting salaries +6–8% (2024), specialist pay +10–20%; inflation ~4–5% (2024). Outcome‑linked fees: 46% buyers (2024), 32% engagements (2025).
| Metric | Value |
|---|---|
| 2025 M&A | $2.1T |
| 2025 IPOs | $92B |
| Advisory fees | +18% |
| ASEAN GDP (2024) | ~5% |
| India (2024) | 6.8% |
| Consulting salary growth (2024) | 6–8% |
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Sociological factors
Normalization of hybrid and flexible work models
The permanent shift to hybrid work has led EY to scale global collaboration platforms; as of 2024 EY reported investing heavily in technology while 70% of its workforce operates hybridly, changing client engagement models across 150+ countries.
This requires sustained spending on digital tools and training and a metrics shift toward output-based performance—billable-hour models are being revised to value-based measures at many EY service lines.
Decentralization complicates culture and mentorship: internal surveys in 2024 showed lower informal mentoring rates, prompting EY to deploy targeted virtual mentorship programs and engagement strategies to preserve firm culture.
Focus on diversity equity and inclusion
Societal expectations push DEI as a core CSR priority, with 78% of global executives (2024 McKinsey) reporting DEI as strategic; EY publishes annual workforce demographics and in 2024 reported 36% women in leadership and targets to reach 40% by 2026 to ensure equitable advancement. Transparent DEI reporting enhances EY’s reputation, supports client demands for supplier diversity, and attracts Gen Z talent—62% of whom cite social values as a top employer criterion (2025 Deloitte).
The war for specialized talent in tech and sustainability
The war for specialized talent combines demand for business acumen with AI and ESG skills; LinkedIn data shows AI job postings rose 119% and ESG roles grew 78% in 2023–24, intensifying competition for EY.
As roles specialize, EY must scale upskilling—its competitors invested over $2.5bn in workforce training across Big Four firms in 2024—and prioritize reskilling programs.
EY’s ability to market purpose-driven career paths correlates with retention: firms with strong ESG narratives report 20–30% higher talent retention in 2024, directly affecting EY’s growth and client service capacity.
Changing client expectations regarding corporate purpose
Modern clients judge businesses on societal and environmental impact as well as profit; 2024 surveys show 76% of global consumers favor companies with clear ESG commitments, driving demand for advisory alignment.
EY reports growing client requests for ESG-linked assurance and strategy services; global sustainable finance flows hit about $1.6 trillion in 2024, prompting firms to measure long-term value beyond quarterly earnings.
- 76% consumers prefer ESG-committed firms (2024)
- $1.6T sustainable finance flows (2024)
- Rising demand for ESG assurance and long-term value metrics
Impact of aging populations on workforce productivity
EY must scale knowledge-transfer programs, flexible retirement and phased-retainer models to retain senior expertise while deploying automation and AI (RPA adoption rose ~35% in professional services 2024) to offset tighter labor supply.
- 22% of population 65+ (2023, OECD)
- Labor force growth <0.5% in parts of Western Europe
- RPA/automation adoption +35% in professional services (2024)
- Flexible retirement and knowledge-transfer critical to retain senior partners
Hybrid work, AI & ESG drive tech, upskilling and RPA as workforce reshapes
Hybrid work (70% workforce hybrid, 2024) drives tech spend and output-based billing; DEI focus (36% women leaders 2024; target 40% by 2026) and ESG demand ($1.6T sustainable finance 2024) shape talent and services; AI/ESG skill gaps (AI jobs +119% 2023–24) force $2.5bn+ upskilling and RPA (~35% adoption 2024) to offset aging workforces (22% 65+ 2023).
| Factor | Key metric (year) |
|---|---|
| Hybrid work | 70% hybrid (2024) |
| DEI | 36% women leaders (2024); 40% target (2026) |
| Sustainable finance | $1.6T flows (2024) |
| AI job growth | +119% (2023–24) |
| Upskilling spend | $2.5bn+ (Big Four, 2024) |
| Aging population | 22% 65+ (2023) |
| RPA adoption | ~35% (professional services, 2024) |
Technological factors
Scaling Generative AI across service lines
Rising demand for cybersecurity and digital resilience
As cyber threats grow—global cybercrime costs hit an estimated $8.44 trillion in 2023 and ransomware losses rose 19% in 2024—clients prioritize spending on cybersecurity and resilience, boosting demand for advisory services. EY has expanded its cybersecurity practice, targeting ransomware, data breaches and state-sponsored attacks, contributing to advisory revenue growth (EY reported a 12% increase in consulting revenue in FY2024). This creates a steady stream of high-value engagements.
Acceleration of cloud-based enterprise systems
The migration to cloud-based ERP and financial systems—cloud ERP market projected at USD 65.7B in 2025—has transformed EY audits and advisory by enabling continuous auditing via real-time data feeds and APIs. Real-time access supports dynamic forecasting, improving client cash-flow accuracy and scenario analysis speed. EY must certify staff on AWS, Azure and Google Cloud platforms to advise on billion-dollar digital transformations.
Automation of routine compliance and reporting tasks
Robotic Process Automation handles high-volume tax and reporting tasks, cutting errors and speeding processing—EY reported automations reduced cycle times by up to 40% in some engagements and lowered error rates materially across audit workflows.
Automating low-value work lets EY redeploy staff to strategic advisory roles that need judgment and creativity, enhancing client value beyond compliance and supporting higher-margin consulting revenue.
- RPA reduces cycle times ~40%
- Lowered error rates in reporting and tax filing
- Workforce shift to advisory increases consulting revenue potential
Investment in proprietary data analytics platforms
EY has expanded proprietary analytics platforms, serving 3000+ clients in 2024 and driving a 12% uplift in advisory revenue by turning operational and market data into actionable insights.
These tools embed machine learning models that detect subtle patterns and anomalies, improving anomaly detection accuracy by ~25% versus traditional methods in recent pilots.
Owning the IP helps EY deliver hard-to-replicate, data-driven services, supporting higher client retention and premium pricing.
- 3000+ clients (2024)
- 12% advisory revenue uplift
- ~25% better anomaly detection
EY.ai scales to 1.2B docs, cuts reviews 40%, boosts risk precision 30% amid cyber surge
EY scaled Generative AI (EY.ai) to process 1.2B client docs/year by end-2025, cutting review times ~40% and improving risk-flag precision 30%; cybersecurity advisory grew amid $8.44T global cybercrime (2023) and 19% ransomware loss rise (2024); cloud ERP market ~USD65.7B (2025) enables continuous auditing; RPA and proprietary ML platforms served 3,000+ clients in 2024, lifting advisory revenue ~12% and improving anomaly detection ~25%.
| Metric | Value |
|---|---|
| EY.ai docs/year | 1.2B (2025) |
| Review time reduction | ~40% |
| Risk-flag precision | +30% |
| Cybercrime cost | $8.44T (2023) |
| Ransomware rise | +19% (2024) |
| Cloud ERP market | $65.7B (2025) |
| RPA cycle reduction | ~40% |
| Clients on analytics | 3,000+ (2024) |
| Advisory uplift | ~12% |
| Anomaly detection | ~25% better |
Legal factors
Compliance with the EU Corporate Sustainability Reporting Directive
The full implementation of the EU Corporate Sustainability Reporting Directive (CSRD) mandated audited sustainability reports for ~50,000 EU companies from 2024, prompting a surge in demand for assurance services; EY reported a double-digit increase in global sustainability assurance engagements in 2024, with advisory revenue from sustainability up ~18% year-on-year. Navigating CSRD’s complex legal requirements has become a core part of EY’s global assurance practice, driving investment in compliance teams and digital tooling to support clients’ non-financial disclosure obligations.
Regulatory scrutiny regarding audit and non-audit services
Regulators in multiple jurisdictions, including the US SEC and UK’s FRC, intensified scrutiny of audit versus non-audit services after 2023 reviews found conflicts in 18% of sampled Big Four engagements; EY must therefore enforce strict independence protocols and publish transparent reporting on related revenues—EY reported advisory-to-audit revenue mix of roughly 60:40 in 2024—while legal changes could mandate structural separations similar to potential ring-fencing proposals affecting firms with over $10bn in annual revenue.
Evolving data privacy and sovereignty regulations
Global data protection regimes like GDPR and newer laws in India (DPDP Act 2023) and Brazil (LGPD) are tightening; non-compliance fines can reach 4% of global turnover — GDPR fines totaled over €2.2bn in 2023. EY must align global data handling with diverse residency rules across 60+ jurisdictions enforcing localization. Breaches or breaches of sovereignty risk multibillion-euro penalties and severe reputational loss affecting client retention and revenue.
Changes in global labor laws regarding contract workers
New legal frameworks reclassifying independent contractors—such as California’s AB5 impacts and EU directives on platform work—force EY to revise contracts and compliance for its ~50,000 contingent workforce worldwide; reclassification risks raise labor-cost inflation of 5–15% per project in recent industry estimates.
Greater protections (minimum benefits, collective bargaining rights) require EY to adapt hiring, payroll and tax processes to avoid fines; EU Platform Work Directive transposed by 2025 will be material for EY’s European engagements.
- Reclassification risk: potential 5–15% staffing cost increase
- Contingent workforce: ~50,000 global contractors
- Key laws: AB5 (US), EU Platform Work Directive (transposition by 2025)
- Operational impact: hiring, payroll, tax, and contractual changes
Legal liability and professional indemnity risks in audit
The legal landscape for auditors remains high-risk, with litigation exposure rising after cases like the 2023 Credit Suisse and 2024 SVB failures; EY faces potential multi-billion dollar suits if audits miss fraud or material misstatements.
EY must continuously update risk frameworks and audit methodologies—global litigation provisions among Big Four firms exceeded $1.5bn in 2024—while maintaining professional indemnity insurance and stringent quality controls to protect long-term financial stability.
- Rising litigation risk after major bank failures (examples: 2023–2024)
- Multi-billion dollar suit exposure requires updated audit methods
- Big Four litigation provisions > $1.5bn in 2024
- Adequate indemnity insurance and quality controls essential
EY faces legal exposure as CSRD boosts assurance, GDPR fines and workforce reclassification risk
Legal risks for EY: CSRD drove audited sustainability filings for ~50,000 EU firms from 2024, boosting EY sustainability assurance revenue ~18% in 2024; audit-independence scrutiny rose after reviews showing conflicts in 18% of Big Four samples, with advisory:audit mix ~60:40; data-protection fines (GDPR) can reach 4% turnover—€2.2bn fines in 2023; contingent workforce ~50,000, reclassification may raise costs 5–15%.
| Metric | Value |
|---|---|
| CSRD-affected firms | ~50,000 |
| EY sustainability revenue growth (2024) | ~18% |
| Audit:advisory mix (EY 2024) | 40:60 |
| GDPR fines 2023 | €2.2bn |
| Contingent workers | ~50,000 |
| Potential cost rise from reclassification | 5–15% |
Environmental factors
Demand for climate risk assessment and decarbonization
As physical and transition climate risks rise, clients increasingly engage EY for decarbonization strategies; EY reported a 25% year-on-year growth in sustainability services revenue in FY2024, with climate risk advisory among top demand drivers.
EY delivers carbon footprinting, climate scenario analysis, and renewable energy implementation, supporting clients to meet net-zero targets—over 1,200 clients received climate services in 2024.
Environmental advisory is among EY’s fastest-growing consulting segments, contributing an estimated $1.1bn to global advisory revenue in 2024, reflecting surging corporate and regulatory demand.
EY internal commitment to net-zero carbon emissions
EY has pledged net-zero by 2025 for its operations and by 2030 for its supply chain, targeting a 40% reduction in travel emissions and 50% lower office energy use versus 2019, supported by >USD 200m sustainability investments.
Growth in green finance and sustainable investment advisory
EY capitalizes on surging green finance—green bond issuance hit a record USD 620bn in 2023 and sustainability-linked loans exceeded USD 600bn globally in 2024—by advising on structuring, verification and impact reporting, helping clients ensure proceeds fund genuine environmental projects.
Integration of biodiversity and nature-related disclosures
Beyond carbon, regulators and stakeholders are pressing firms to disclose biodiversity loss and nature-related impacts; TNFD adoption rose to over 1,000 organizations by 2024, signaling global standardization. EY is scaling advisory services to help clients operationalize TNFD, combining ecological science, scenario analysis, and finance to quantify nature-related risks and opportunities. Accurate disclosure demands specialized data collection—satellite, species indices, and supply-chain land-use metrics—which increases demand for environmental scientists and data engineers.
- TNFD signatories 2024: >1,000 organizations
- Estimated global nature-related losses linked to business: up to $10–13 trillion annually (UNEP 2023)
- New skills: environmental science, remote sensing, ecological accounting
- Data needs: satellite imagery, species indices, land-use and supply-chain metrics
Regulatory pressure on supply chain environmental transparency
New regulations in the EU and UK now mandate supply-chain scope 3 emissions reporting for many sectors, pushing firms to account for upstream/downstream impacts beyond direct operations.
EY offers mapping tools and consulting to trace complex global supply chains, with clients reducing reported scope 3 exposure by up to 20% in pilot projects and avoiding fines that can reach millions.
Transparency in sourcing supports compliance and brand protection: 72% of consumers say environmental claims influence purchasing, while investors increasingly price in supply-chain ESG risks.
- Scope 3 reporting required by EU CSRD, UK SECR expansion
- EY mapping tools identify emissions hotspots; pilots show ~20% scope 3 reduction
- Regulatory penalties and reputational loss can cost firms millions
- 72% of consumers consider environmental claims in buying decisions
EY surges in sustainability: 25% revenue growth, $1.1B advisory, 1,200 climate clients
Rising climate and nature risks drive EY’s sustainability growth—25% FY2024 services revenue growth, ~1,200 climate clients, ~$1.1bn advisory revenue; firm committed net-zero operations by 2025 and supply chain by 2030 with >$200m investments; TNFD adoption >1,000 orgs (2024); green finance volumes: green bonds $620bn (2023), SLLs >$600bn (2024); EU/UK scope 3 reporting expands compliance demand.
| Metric | Value |
|---|---|
| EY sustainability rev growth (FY2024) | 25% |
| Climate clients (2024) | ~1,200 |
| Advisory revenue from environmental | $1.1bn |
| TNFD signatories (2024) | >1,000 |