In a move which could make 30 local IT staff redundant, Deloitte Consulting is believed to be progressively closing down its Asia-Pacific and Africa IT support team. The move follows the consultancy's reintegration with its parent Deloitte Touche Tohmatsu, according to a former Australian IT professional with the company.
In February 2002, accounting firm Deloitte Touche Tohmatsu announced it would divest its consulting practice to avoid potential conflicts of interest which surfaced during the Enron accounting scandal over Arthur Andersen's dual role of auditor and consultant. But DTT cancelled those plans in April in order to survive a tight credit market and deteriorating economic conditions over the past 14 months, spurred on by the Iraq war.
Deloitte Consulting, which provides IT integration and business process outsourcing services, employed more than 40 permanent IT staff to support its Asia-Pacific and Africa practices. It employs some 3500 staff in the Asia-Pacific region, with Japan and Australia accounting for more than half of headcount.
Around 12 IT employees in Australia recently made redundant would leave the company within a week, the former Deloitte Consulting source told Computerworld.
Since the company abandoned its plans in April to spin off from its parent, IT staff in Australia suspected they "might be the unlucky ones", the source said.
"My gut feeling is that about 30 local IT staff will be affected."
Deloitte Consulting and Deloitte Touche Tohmatsu could not confirm or deny the number of staff cuts the company would make as a result of the reintegration.
Faced with a shrinking global market, IT services providers like Deloitte Consulting have had to adapt their strategy to get out of what Gartner describes as the danger zone between bigger all-round IT services companies and smaller niche players.
The IT services industry suffered its first year-on-year revenue drop in 2002, as cost-conscious customers cut back on expensive discretionary projects, and a growth in offshore services pushed prices down, according to Gartner. Asia-Pacific spending on consulting services fell by 4.3 per cent on 2001, registering negative growth for the second year running.
Gartner analyst Roger Cox has warned for some time now that companies at the extremes of the market stand the best chance of surviving in difficult times like these. "Those in the middle ground are in danger," he said in November, at Gartner's Symposium/ITxpo in Cannes, France. Deloitte Consulting fell into the same category, Cox said.
In March this year, though, the two Deloittes announced their reconciliation, seeing size as more important than separation, despite the dim view taken by the US Securities and Exchange Commission of accounting firms which also do consulting work for their audit clients.
"Deloitte has made a decision to get back together, trying to head for new markets," Cox said.
(With Peter Sayer.)