Advisory fees set to top £1bn

The re-entry of Ernst & Young into the advisory services market this year
could see Big Four revenues from consulting work top £1bn – a figure that
surpasses levels from 2000 when the firms were heavily involved in big-ticket IT
deals.

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In an exclusive interview with Accountancy Age, Nick Pasricha, managing
partner for client services at E&Y, revealed that the firm was aiming at
annual revenues of more than £200m following the lifting of its non-compete
agreement with Capgemini at the end of last month.

E&Y stepped out of the advisory services market for five years after
completing the sale of its consultancy arm to Capgemini in February 2000.

Pasricha said that the firm was now recruiting heavily to rebuild an advisory
services division of around 150 people.

But he said that E&Y would not be re-entering large IT contracts, leaving
that to the ‘Accentures and IBMs of this world’, and added that the work it
undertook0 would ‘definitely not’ be called consultancy.

‘We’re offering client side advisory work focused around the finance agenda
and our existing capabilities. It’s not consulting. What we’re building will
have no similarity to what we had five years ago and what Accenture, IBM or
Capgemini are doing.

‘The work will be around helping people improve the effectiveness of their
finance function, cost reduction, helping them understand where to make profits,
and improve performance. That is quite a different proposition to consulting.’

With PricewaterhouseCoopers earning around £200m in 2004, Deloitte £315m and
KPMG £149m – all growing on the back of a boom in advisory services – E&Y’s
re-entry to the market could easily see the total market value rise to £1bn. A
KPMG spokeswoman said that revenues from advisory work would grow by more than
50% over the next 12 months.

In 2000, the Big Four took around £700m, but at that time the firms were
heavily involved in IT projects. Only Deloitte still works on big IT deals.