TechnologyAccounting SoftwareUK gains from KPMG deal with Cisco

UK gains from KPMG deal with Cisco

New chairman and corporate finance shake-up to follow $1bn deal with US Internet giant

KPMG in the UK is among the early favourites to host a European centre for innovation following the firm’s international link-up with Cisco Systems in the US.

By buying a 20% stake in KPMG Consulting, Cisco, a leading networking company, has pledged to invest more than $1bn in the firm’s Internet services business. The firm said the deal would not compromise its integrity as it fights to win regulatory approval to list in the US next year. The move comes ahead of a restructuring of KPMG’s operations from 1 October, which will see Stephen Butler, head of the US practice, succeed Colin Sharman as chairman of KPMG International. Sharman – now Lord Sharman – has been made a working peer.

The firm is also expected to use the restructuring – which will see 64 new UK partners appointed – to merge its corporate finance and recovery businesses with transaction services and forensic accounting to create a new grouping called financial advisory services.

Ernst & Young has already announced a similar move with the loss of eight partners. A KPMG spokesman did not rule out job losses but said the group was placed in a ‘growth area’.

The Cisco tie-up will mean jobs for 4,000 Internet integrators over the next 18 months. These engineers will be used to develop and deliver Internet-based data, voice and video services to clients secured by Cisco’s sales teams. KPMG’s consultants will service expanding customer needs in Europe, Asia and Latin America.

KPMG will build six Internet innovation centres, working closely with Cisco, and provide additional support to existing Cisco customers. No details about the location of the European centre have been disclosed, but KPMG said the UK had a strong case.

Graham Oates, KPMG Consulting executive partner in the UK, said: ‘All analysts agree that the European market for Internet integration services is going to expand as rapidly as the US or even faster in the next three years.’

Further details from KPMG Virtual Information Centre

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