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Andersen partners join Ernst & Young -- Business consulting kept out

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Mr Kashi N. Memani, Chairman, Ernst & Young India, Mr Bobby Parikh, Country Managing Partner, Andersen, and Mr Paul Ostling, Ernst & Young Global Executive Partner, at a press conference in Mumbai on Friday.


ERNST & Young (E&Y) has become the largest professional services firm in the country, with the Andersen partners here announcing on Friday that they are joining E&Y.

Mr Kashi N. Memani, Chairman of E&Y's India operations, will be the Chairman of the combined entity, while Mr Bobby Parikh, Country Managing Partner, Andersen, will be its Chief Executive Officer.

"This will create the leading professional services firm in India, with over 60 partners and 2,000 employees," an official statement on the combination, said.

Andersen's India practice is estimated to be its 40th country practice joining E&Y over the last month. The two firms are together effective late Thursday evening, but it would be inappropriate to call it a merger or even an acquisition as the terms are not strictly applicable for partnership firms, Mr Parikh explained on the sidelines of a press briefing.

Though he said the decision to join E&Y was "unanimous" for Andersen's 27 partners, he declined to comment on whether the five partners concerned with the firm's business consulting practice which chose not to join E&Y, had agreed to the larger move. The business consulting practice, employing 140 people, represented roughly 20 per cent of Andersen's turnover in India.

Even as most of Andersen's services will migrate to working under the E&Y name, the business consulting practice will continue to sport the Andersen name till its future is finalised. Following global trends in the sector, business consulting was kept out of the ambit of combined business in most nations where Andersen and E&Y have joined hands, Mr Paul J. Ostling, Global Executive Partner, E&Y, said.

For professional services firms, the combined offering of consulting and audit has generated controversy, with consulting perceived to dilute a firm's required independence on the audit front. It is possible that given the several instances worldwide of business consulting being excluded from the Andersen-E&Y combination, a partner for the consulting business may be found at a global level, Mr Parikh said.

No indication of either the combined turnover of the two firms or their total number of clients, was offered.

Mr Parikh maintained that through the last few months of uncertainty, Andersen, which employs 900 professionals in India, did not lose a single employee.

On the client front, the firm did lose the Wockhardt audit, but the pharma company merely moved to E&Y. The officials did not see any restructuring or employee cuts happening post-combination.

Mr Parikh attributed the choice of E&Y to a shared vision for the future, shared commitment to quality and people, opportunities for growth and the fact that size did matter to provide depth and breadth of services besides helping to retain high quality people.

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