E&Y signals 2005 return to consultancy market

A senior source within Ernst & Young has revealed to Accountancy Age that the firm is 'seriously considering' a move back into the consulting sector next year, though E&Y insisted this week that it would not be re-entering the IT consulting market.

The revelation follows persistent rumours that the major firms which have sold off consulting arms are increasing their work in the sector.

E&Y is contractually ruled out of offering consultancy services until next year, as part of a pioneering agreement made when its consulting arm was sold to Capgemini in 2000.

'E&Y provides assurance and advisory services that address our core competencies around finance, risk, transactions, and reporting and regulatory matters,' said a spokesman.

But Deloitte UK senior partner and chief executive John Connolly claimed it was 'just a matter of time' before other Big Four firms were more transparent about the consulting services they offer.

'We have been very clear and transparent about our strategy in consulting, believing it is in the interests of our clients and people,' said Connolly.

E&Y chairman Nick Land (pictured) said last year that, despite the sale of the firm's consulting arm, it 'remained committed' to advising its clients on a range of business issues.

The firm has not provided a breakdown of consultancy-related revenue in recent Accountancy Age Top 50 firms league tables. Of the other two major firms, KPMG strenuously denied it was involved in consulting, but PricewaterhouseCoopers remains a member of the Management Consultancies Association, despite the sale of its own consulting arm to IBM in 2003.

Sarah Taylor, MCA director, confirmed PwC was still a member.

In its first UK annual report published last year, PwC did not break out consulting revenues. The firm denied it was considering a move back into IT consulting. 'Our advisory business is still very important to PricewaterhouseCoopers,' said a spokesman. 'But the "big ticket" kind of work that we used to do was sold off to IBM.'

Deloitte also insisted its major consulting work did not come from audit clients. 'Clearly, our strategy follows both the spirit and the letter of regulatory requirements,' said Connolly.

Former SEC chairman Arthur Levitt vigorously campaigned in the late 1990s for a ban on auditors providing IT and consulting services.