Is it all over for consultancy hiring at the Big Four?
For many working in financial services, the ongoing (and sizable) recruitment within the Big Four professional services has provided a rare beacon of hope within an otherwise bleak recruitment landscape.
However, if the European Commission's proposals, compiled by internal market and services commissioner Michel Barnier, to break up the four largest accountancy firms are implemented, expect this to come to a shuddering halt.
The reforms, aimed at injecting more competition into an audit market dominated by the Big Four, include mandatory rotation of audit firms, a tendering process in the selection of any new auditor and won't allow audit firms to provide non-audit services, such as consulting and advisory work, "to avoid all risk of conflicts of interest".
It's the latter point that's seen as the real game-changer. There's a precedent here - in the early-2000s Ernst & Young sold its consulting arm to Capgemini, PwC to IBM and KPMG to Atos Origin after regulatory concerns in the US over accountancy firms owning lucrative consulting arms.
They've only just managed to build them up again and have been recruiting extensively over the years, more recently in financial services, regulatory and technology consulting.
The chances are that if the regulations are pushed through, the Big Four firms would be forced to spin off their consulting arms again. This would mean, however, that they'd no longer be able to leverage their relationships with clients they provide auditing services for, which could impact their pipeline of work.
"The impact would be massive," says Rakesh Pabbi, a former consultant at PwC and KPMG and now CEO at recruiting firm Consulting Point. "Deloitte was the only Big Four firm to retain its consulting arm in the early-2000s and the other firms have been playing catch up since bringing theirs back in-house. There are still a lot of roles in this area, and some people have moved from other areas of financial services, so if recruitment stopped the City would feel the effect."
If these proposals are accepted, many currently working in the Big Four firms' consulting and advisory divisions would start their own ventures or join smaller firms which would see more work, suggests David Howell, director of recruiters EM Group.
"Anyway, we're also seeing more banks and financials services organisations recruit strategy teams in-house, to advise on everything from regulatory reform, the implications of the eurozone crisis and growth markets," he says. "This is more cost-effective than using an external consultant and allows them to be much more reactive."
The Big Four firms we contacted declined to comment specifically on the impact on the consulting divisions, nor would any of the (many) partners we got in touch with. Currently, the focus seems to be on ensuring the legislation is watered down - Rolf Nonnenmacher, head of KPMG's EMA region, said they would engage with the European Parliament to "fundamentally alter these proposals".
However, some have complained that the separation of their businesses would mean it's harder to attract such a broad range of expertise.
James Chalmers, UK head of assurance at PwC, said that the ability to offer a variety of career paths was one of the main reasons UK accountancy firms attract internationally mobile talent. If these proposals are carried through, "people may simply choose to work elsewhere in the world", he said. Ernst & Young said that the "multi-disciplinary model" helps "attract the best talent".
