Eight insolvency partners have been put on notice to leave by 30 September following a shock internal decision to merge the corporate recovery and corporate finance service lines.
‘The corporate finance department has effectively mounted an internal takeover of the insolvency business. It was a big surprise but I think other Big Five firms are moving in that direction,’ said an inside source. The increasingly global nature of insolvency was narrowing E&Y’s field of opportunity, particularly in the face of competition from Big Five rivals such as Arthur Andersen and PricewaterhouseCoopers, he added.
German enterprise software company SAP is seen as the key to E&Y’s consultancy redundancies. New licence sales have dried up as customers focused on year 2000 remedial work, so SAP has been doing more consultancy work itself.
Dennis Keeling, chief executive of Basda, commented: ‘SAP is expanding its consultancy in competition with the Big Five and the Big Five are losing out.’
Both Ernst & Young and SAP downplayed any possible rifts in their relationship. While confirming that 10 people would be made redundant from its SAP practice, a spokeswoman for E&Y said: ‘The management consultancy arm of Ernst & Young in the UK continues to work very closely with SAP and other third party vendors and our clients to ensure their needs are being met.’
See VNU Newswire and Accountancy Age for detailed reports.
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