Consulting Spin-Offs Bring Ad Campaigns and Salary Cuts

As several Big Five firms prepare to spin off their consulting units, a pattern of belt tightening seems to be emerging to accommodate the huge investments in advertising and public relations needed to choose new names and create new brands.

On April 22, 2002, AdWeek reported that PricewaterhouseCoopers (PwC) has awarded the creative portion of its $80 to $100 million budget for rebranding the PwC consulting unit to McCann-Erickson and Hill, Holliday, Connors, Cosmopulos, both of which are owned by its audit client, Interpublic Group. AdWeek says that when Accenture launched a similar marketing effort in early 2001, it spent about $65 million.

PwC has been seeking to sell or spin off its consulting group for some time. In response to the economic slow-down that hit the consulting business especially hard, the firm undertook a difficult cost-cutting program in August 2001. PwC's program involved laying off a number of workers, cutting salaries of consultants by 5 to 10%, and deferring job offers for new hires.

More recently, Deloitte Touche Tohmatsu decided to separate its U.S. consulting arm in connection with voluntary audit reforms. It, too, is cutting costs and making salary reductions. According to Reuters, the salary reductions are not across-the-board. They apply only to senior level professionals and will take effect sometime in the summer. "Right now we are expecting the average salary reduction would be something below 10 percent," John L'Abate, a spokesman for Deloitte Consulting, told Reuters. He said the consulting group is trying to trim costs in other areas, too, in an effort to avoid layoffs.

-Rosemary Schlank

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