Conventional wisdom has it that, in hard times, companies fire their consultants. Apparently, the convention must be changing.
How else can you explain recent announcements by PricewaterhouseCoopers and KPMG International. The two accountancies both reported revenue increases for the fiscal years 2001. And the CEOs for the two firms appear remarkably upbeat about the prospects for 2002.
PwC management said global revenues rose 7.6 percent to $22.3 billion for the fiscal year ended June 30, 2001. “Economic conditions — and the global climate, in general — were nothing if not challenging last year,” said PricewaterhouseCoopers CEO Samuel DiPiazza Jr. in a statement. “Nonetheless, we are especially encouraged by the nearly 10 percent growth registered by our assurance, tax and corporate finance and recovery practices, the core businesses that will remain with PricewaterhouseCoopers following the planned separation of our consulting services.” PwC is expected to sell or spin off its consultancy in 2002.
For its part, KPMG reported a 9 percent jump in revenues, up to a record $11.7 billion in dollar denominated terms for the fiscal year ended September 30, 2001. In local currency terms–before translations to U.S. dollars, that is–KPMG’s worldwide revenue rose a hefty 15 percent. Those numbers are even more impressive given that they exclude KPMG Consulting Inc., which was spun off earlier this year. “We achieved gains in revenue and market share despite the persistent and challenging economic climate during the latter half of the fiscal year,” said chairman Stephen Butler in a statement. “Our growth underscores the fact that KPMG continues to lead the industry in winning market share from its competitors.”
The firm’s one-time consulting unit has not done so hot as a standalone business, however. In the third quarter of the calendar year, revenue at KPMG Consulting fell 12 percent, with the company reporting a net loss of $57.6 million. During the same quarter the previous year-while still under the KPMG Internationl banner–the company turned a profit of around $21 million. Industry watchers say the consultancy, which has a big IT consulting operation, has been hit hard by the decrease in corporate technology spend.
By comparison, rival Accenture seems to be doing just fine since its spinoff from Arthur Andersen. Yesterday, Accenture management announced the consultancy turned a net profit of around $200 million in the quarter ending November 30–a 7.6 percent increase from the previous quarter. Accenture management noted that Europe helped fuel the growth in business, along with the consultancy’s outsourcing and business process outsourcing services. So far, KPMG Consulting has failed to generate sizeable business from BPO services.