Management consulting firms saw another year of growth in Orange County as they continued to work with public companies on meeting Sarbanes-Oxley regulations.
During the past year, management consultants hired more workers in OC than in other offices. Local employment was up 14% to about 1,399,thanks to newcomer No. 4 Hitachi Consulting Corp., which counts some 150 workers here. Companywide, headcounts rose only 5%.
Excluding Hitachi, the 15 other firms on the list posted an 8% increase in local workers.
Seven of the firms reported hiring was up. Three said worker counts were flat and six were Business Journal estimates.
This year’s gain is bigger than the 5% rise a year ago, and on par with the 16% increase seen two years earlier.
No. 1 BearingPoint Inc. in Costa Mesa held its top spot with an estimated 295 workers. BearingPoint has seen a hiring spurt the past few years, adding nearly 100 workers.
No. 2 Resources Connection Inc. in Costa Mesa also kept its spot with a 19% gain to 285 workers.
Sarbanes-Oxley work continues to make up about 20% of Resources Connection’s business, according to Tanja Cebula, senior vice president for the West.
Earlier this month, Resources Connection said it’s buying Britain’s Compliance Consultants Ltd. for about $8 million in cash and stock. It plans to fold Compliance Consultants into its regulatory consulting practice for Britain and Western Europe, the company said.
In the U.S., Resources Connection’s project management business has seen growth from businesses looking to become more efficient, Cebula said.
Companies are tapping consultants for projects such as revamping their supply chains to making their financial bookkeeping and reporting processes smoother, she said.
Management consultants have an edge over the traditional Big Four because they can be contracted on an interim basis,which is much cheaper than having a full-time team, she said.
“Ten years ago, companies used to outsource their business initiatives to traditional consulting firms,” Cebula said. “Over the last five or six years, a lot of companies reduced their spending. Those companies needed professionals that were more cost effective.”
Another trend: companies want to “own” their own business initiatives. Typically, they’ll hire consultants to build a plan, and then execute it themselves, she said.
“They are still embarking on significant change but taking more ownership or control of that change,” Cebula said.
No. 3 Jefferson Wells International Inc., with headquarters in Brookfield, Wis., held its spot with an estimated 175 workers in Irvine.
Hitachi Consulting, a unit of Tokyo electronics kingpin Hitatchi Ltd., nabbed the No. 4 spot with 150 workers at offices in Orange and Irvine.
Hitachi upped its local presence when it bought Irvine-based information technology consulting firm Iteration2 Inc. in June.
Iteration2 is a reseller of Microsoft Corp.’s supply chain management software. The company had about 100 workers at the time of the deal.
Rounding out the top five was Irvine-based Profit Recovery Partners LLC, which also held its spot. It grew OC workers 17% to 75. Profit Recovery helps companies cut costs on the products and services they buy,including basics like postage, payroll, office supplies and even air conditioning. It only charges clients if they save money.
Companies working to get into compliance with Sarbanes-Oxley continued to drive business, according to Jeanne Malmo, director of business development at newcomer No. 13 RoseRyan in Irvine, which counted 30 workers here.
Most big companies have already handled their Sarbanes-Oxley compliance issues, Malmo said. It’s the smaller ones that are looking for outside help now, she said.
Smaller companies still can use their own internal controls until the end of the year, but must have an accountant review and sign off on it, she said.
Businesses also are hiring consultants to prepare for changes in tax laws expected at the end of 2009, according to John Mooers, chief executive at No. 12 Newport Beach-based 3six0 Advisors Inc., also a newcomer this year.
The company changed its name from Mooers Strategy Group earlier this year. It more than doubled its worker count to 31 during the past year.
Clients include Newport Beach chipmaker Conexant Systems Inc., Microsoft, Hewlett-Packard Co. and Toshiba Corp.
“Middle-market companies are trying to increase shareholder value between now and 2009 because of a potential tax law change that would have a negative effect on their taxable income, should they have a liquidity event,” Mooers said.
Other firms are getting a boost by setting up software programs that help companies do their own bookkeeping.
“The other growth spurt will be in system implementation that happens toward the end of the year,” RoseRyan’s Malmo said. “It’s mostly companies taking it to that next level from a small accounting package to something more robust. It goes hand in hand with the SEC reporting.”
