Here's another sign of a weak economy...
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Pricewaterhouse Consulting Is Planning Further Layoffs
By JONATHAN D. GLATER
August 2, 2001
Nytimes.com
The consulting arm of PricewaterhouseCoopers warned employees of another round of layoffs yesterday, primarily in its United States offices, affecting as many as 800 people, or 5 percent of its consultants and support staff.
The move by PricewaterhouseCoopers, one of the world's big accounting and consulting firms, is an effort to cut costs in response to sharply declining demand by clients for consulting services, Pricewaterhouse executives said.
Analysts said that while all consulting firms face difficult times, PricewaterhouseCoopers seems to be in a particularly awkward place. This is its second round of layoffs — the first one in the spring affected about 1,000 employees — and the direction of the consulting unit, which was almost sold to Hewlett- Packard late last year, is unclear.
Mike Collins, managing partner of the Pricewaterhouse consulting arm for North America, said in a telephone interview yesterday: "Unfortunately, the costs of consulting have grown as a result of the strong economy of recent years, and have not yet been reset to reflect the current environment. We're basically doing the same thing we would tell our clients to do."
PricewaterhouseCoopers will reduce base compensation for both junior consultants and partners by 5 to 10 percent, Mr. Collins said. In addition, a greater portion of employees' salaries will depend on individual and team performance. The salary reductions and layoffs will take effect over the next few months.
The firm will also cut back recruiting efforts on college and business school campuses this fall, and has asked recent graduates who were to begin work in the fall to defer their starting dates. Pricewaterhouse will tell prospective employees by April 2002 whether and when they may start work, a spokeswoman said.
The changes are "reflective of PWC's position right now in the marketplace," said Tom Rodenhauser of Consulting Information Services in Keene, N.H. The PricewaterhouseCoopers consulting arm, he said, is not as big as Accenture or IBM (news/quote) Global Services, both technology services consultants, but is not a traditional division of an accounting firm, like Deloitte Consulting or Arthur Andersen's consulting business, either.
Some of the changes might also be preparation for a transaction involving the consulting business, several analysts said. Indeed, Pricewaterhouse's Mr. Collins said the firm still planned either a public offering for the consulting unit or a sale to an outside buyer, but he did not give a timetable. "We're not interested in doing a fast transaction if it's not the right transaction," he said.
Over all, the consulting business is suffering from the slowdown in the economy, which has led companies in a variety of industries to cut back spending. Growth in revenue at the 50 highest-grossing consulting firms fell last year to 11.7 percent from 19.7 percent in 1999, according to Kennedy Information, which tracks the industry, and consultants at several firms say privately that growth has fallen further this year.
"The big guys are all hemorrhaging," Mr. Rodenhauser said. "The business turned so sharply and they were caught with so much overcapacity that it was inevitable that they would have to cut." |
