Andersen considers hiving off consulting arm
Thursday 13 June 1996
The development comes as General Motors is about to spin off EDS, the information technology outsourcing business that was founded by Ross Perot, amid speculation that winning long-term deals to supply computer and finance services to large public and private-sector organisations requires greater capital investment than is available to private partnerships.
Andersen Consulting, which increased its world-wide revenues by 24 per cent last year, has, like EDS, grown rapidly in recent years on the back of the trend for companies to transfer responsibility for IT and other non-core activities to specialist suppliers.
Andersen recently agreed an extensive deal with the Sears retail group and earlier this week announced a 10-year contract to carry out the finance functions for Exel Logistics, part of NFC.
A spokesman said that the global firm, known as the Arthur Andersen Worldwide Organisation, had launched an initiative to look at long-term options, under which a small group of partners had been told to go away and "think as radically as they like". Separating the two operations would probably be one issue under discussion, though nothing had been decided yet. The group would report to all the partners later in the year.
Tensions over the profit-sharing arrangements between the main accounting firm and the consulting business and the confusion created by the accounting firm's increasing moves into consultancy are thought to be behind pressure for a split, according to today's Accountancy Age.
However, rivals believe that the review could recommend a closer relationship between the various parts of the Chicago-based organisation. At the moment, Andersen Consulting stands on its own within the world-wide organisation, which last year billed $8.1bn, while Arthur Andersen comprises the main accounting business, plus the Binder Hamlyn accountancy firm acquired last year and various law firms, including, in Britain, Garrett & Co.
"The trend is to offer a seamless global service. It's a bit out of kilter with that to have one consulting arm and another part also doing consulting," one source said.
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