PricewaterhouseCoopers (PwC), the UKs largest professional services firm, plans to treble its fees from management consulting to more than 1.3 billion within the next four years and hire 2,000 staff, including more than 100 partners.
Three of the Big Four accounting firms Ernst & Young, KPMG and PwC sold their consultancy arms at the start of the decade after their growth led to clashes over business strategy. The Enron scandal also aroused concerns over conflicts of interest. Only Deloitte kept its consulting practice.
However, the big accountancy firms have been rebuilding their consulting arms and want to capture some of the market from strategy advisers, such as McKinsey, and providers of technology-oriented and outsourcing projects, such as Accenture and IBM.
PwC is counting on aggressive growth in its consulting practice to help it to keep its lead as the UKs biggest professional services provider.
Deloitte, its closest rival, yesterday reported a 2 per cent drop in revenue to 1.97 billion for the year to May 31. Auditing and consulting fees rose but its tax practice income fell 7 per cent and corporate finance dropped by 9 per cent. Partners profits dipped 7.5 per cent to an average of 883,000.
John Connolly, Deloittes senior partner, said: Overall performance was satisfactory in extremely tough markets. Looking forward, we anticipate only a fragile and slow recovery.
At PwC, Ashley Unwin, the head of UK consulting, said his firm had set growth in management consulting as its primary target in the UK over the next four years, with revenues seen trebling from 450 million in the year to June 30. He plans to recruit 2,000 staff to the division, including nearly 200 graduates by September next year, and more than 100 partners.
Although the accounting firms still derive most of their fees from traditional auditing and tax work, there is little room to grow in those practices.
PwC lost Rentokil Initial last week as an auditing client after it struck a deal with KPMG to perform both its internal and external auditing at a saving of about 1 million. Although the arrangement raised questions over whether it infringed rules designed to preserve auditors independence, KPMG is understood to be in talks with other companies over similar moves. However, Oliver Tant, UK head of auditing at KPMG, said that, even in a recession, most companies were unlikely to change auditors.
The Management Consultancies Association said the industry generated 9 billion in revenue last year, and employed 55,000 people. The market is predicted to shrink next year by about 5 per cent as companies spend less on capital-intensive projects.
Financial services groups are expected to be a source of income as big banks and insurance companies seek advice on reshaping themselves as they emerge from the recession.