Orange County’s largest accounting and management consulting firms trimmed their total employment 3% in the past year, as the economic slowdown that hit the tech sector hardest rippled out to professional services.
Altogether the 40 largest accounting firms and management consultants on this year’s Business Journal list, ranked by number of OC employees, had 4,240 local workers. But the 39 firms that reported employment numbers for this year and last showed an aggregate loss of 122 jobs. The total number of OC partners on this year’s list also decreased a tick, down two to 326.
“We’re seeing less aggressive hiring practices compared to two to three years ago because of a softening economy,” said Robert Grant, managing partner of the Costa Mesa office of Deloitte & Touche. “Our firm is taking a close look at costs,especially payroll.”
Grant said he expects the trend to reverse itself as the economy recovers, which he said he hopes will take place towards the end of next year’s first fiscal half.
“Overall I’m pleased with how the OC economy is holding fairly firm,” he said. “With a diverse economy we’re in better shape than a lot of other places in the country.”
Company-wide the 40 firms on the list grew their total companywide employment by 7%, an increase of 37,516, to 603,538.
The list is dominated by the Big 5 firms and the management consulting units they have either sold or spun off in the past couple of years.
Repeating at No.1 on the list this year is the Costa Mesa office of Wilton, Conn.-based Deloitte & Touche LLP, which saw a slight 5% dip in its staff roster but still by far remains the biggest accounting practice in OC with 886 employees. The firm’s companywide staff roster grew 2%,adding 2,000 employees to reach a total of 92,000.
No. 2 on the list, the Irvine office of New York-based PricewaterhouseCoopers held its position from last year and reported an 11% drop in employment to 490 employees in the county.
Debuting at No. 3 is CAP Gemini Ernst and Young, the entity formed when CAP Gemini bought Ernst & Young LLP’s consulting practice. No. 4 on the list was the Irvine office of New York-based E & Y;, which recorded a 15% drop in OC employment, losing 57 positions from the previous year for a total county staff roster of 325.
“Because there’s been a slowdown in the economy we’ve been trying to manage our cost side better by adjusting our overhead appropriately,” said managing partner Sally Anderson.
“We saw that a lot of the money has come out of the technology industry and gone into real estate,those clients had a very healthy year,” said Anderson. “Residential real estate is slowing now, but it had a strong year because of short housing supply.”
Anderson added that real estate, which had posted double-digit growth rates in recent years, likely will settle to 4% to 5% growth over the next few years since real estate is more of a trailing indicator than a leading indicator of overall economic health.
“Overall for all sectors we expect 2002 will be a little bit stronger than 2001,” she said. “And that’s how we’ve budgeted for next year.”
While the OC staff roster dropped 15%, Ernst & Young’s company-wide staff roster grew 1%,adding 842 employees to reach a total count of 77,842.
No. 5 KPMG LLP fell two notches because it spun off its management consulting unit. The company recorded 300 employees, while the consulting unit, No. 7 KPMG Consulting Inc., had 150 county employees. The total at the two firms is the same as KPMG’s pre-spinoff total last year of 450.
Andersen (formerly Arthur Andersen) tied KPMG for No. 5, with no change in its OC staff roster. Companywide, Andersen added 13,000 employees,an 18% increase for a total of 85,000 employees.
Although the Big Five dominate, with two-thirds of the employment on the entire list for OC, many of the smaller accounting firms on this year’s showed solid growth in hiring.
This year’s new “best of the rest” company was acquisitive Irvine-based Corbin & Wertz, which grew employment 22%, adding 19 employees for a total of 104 and the No. 8 slot. The firm also added seven CPAs and three new partners.
Corbin & Wertz also is the largest OC-based firm on the list.
The biggest chart debut on this year’s list went to the Irvine office of New York-based McKinsey & Co., a management consulting firm that quintupled employment from 5 to 25,a whopping 400% increase and good enough to bring the firm to its first-ever appearance on the list at No. 28.
Office director Dennis Sweeny said the company expanded its office because of the large volume of OC-based work the firm handles. “Plus we moved a lot of people down here from LA,” Sweeny said.
Other companies debuting on this year’s list included No. 36 Irvine-based Hausmaniger Benoe Lang Alford & Geselowitz, which added 6 OC employees for a total of 20,a 43% increase.
Debuting at No. 37, the Newport Beach office of Sherman Oaks-headquartered Management Action Programs Inc. added one employee to reach a total of 20.
No. 38 debut Lake Forest-based Advanced Risk Management Techniques Inc. also added an employee for a total of 19. n
