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Old, new consulting firms compete for talent

For James Lee, Andersen Consulting was a great place to spend a couple of years in "basic training" at the start of his career.

For James Lee, Andersen Consulting was a great place to spend a couple of years in "basic training" at the start of his career.

But last October the need for a change lured the 29-year-old to procurement software start-up Ariba, where he took a job as a project consultant. The salary Ariba offered was about the same as what he earned at privately held Andersen, but Ariba, which went public in June and has a market capitalization of about $6 billion, offered something more: stock options and the opportunity to work for a start-up, he said.

"If you have ownership, you're going to act as if you own the company," he said. "Whereas at Andersen you don't get a piece of the company."

Start-ups with money to burn and public offerings on tap have been busy raiding the IT services giants (including IBM Global Services and EDS) as well as the so-called Big 5 consulting firms (Andersen Consulting, KPMG, PricewaterhouseCoopers, Ernst & Young, and Deloitte & Touche), forcing them to sometimes play second fiddle.

"The Big 5 used to be where all these MBAs die and go to heaven," said Peter Gregory, a senior partner with search firm Confidential Global Search, which recruits for the start-ups. "But now these same Big 5 companies are competing with all of these new companies. This is a gold rush going on out there where they [recruits] don't have to work 5, 10, or 20 years to score big."

Though the older firms can offer recruits intense training and a directed career path, relative newcomers such as Scient, Viant, Zefer, iXL, Razorfish, and Proxicom often hire talented 20-, 30-, and 40-somethings with promises of big stock options and a fun, flexible work environment--despite long hours.

These companies also offer the opportunity to work for a company focused purely on e-commerce, as well as innovative projects that would be too small for Andersen and IBM.

"The cultural dynamics are very different," Gregory said. "[The] Andersens aren't set up to let them work in pure e-commerce terms and there's the compensation issue as well."

Stock options strengthen a start-up's position during recruiting, said Rudy Puryear, who built Andersen's $425 million e-commerce consulting practice and then left in June to join Lante, a business-to-business e-commerce consultancy.

"Given some of the market caps on Wall Street, it's causing some competition," he said.

The established firms are now reevaluating their own packages, though privately held firms such as Andersen, which hires about 15,000 employees per year, must rely on salary, signing fees, or bonuses--alongside its prestige-- to compensate its rank-and-file employees.

While Andersen compensates its partners well, it could offer additional performance-based incentives or bonuses to make up for the lack of stock options, Puryear said. He said there was no intent to do so at the time he left the company.

Andersen, an $8.3 billion company with 65,000 employees worldwide, could not be reached for comment.

Changes in order for old guard
Meanwhile, EDS, a publicly traded systems integrator whose stock is slowly creeping back to its 52-week high, believes its new $2 billion e-business practice will strengthen e-commerce recruiting efforts. To lure new talent, EDS is now recruiting from a larger pool of universities and scouring smaller colleges for talent. The company also has switched to a business casual dress code apparently favored by young grads and older recruits alike.

"We're looking for a different breed of folks," said Tommy Tompkins, recruiting manager for EDS's E.Solutions.

IBM Global Services, a pioneer in the e-commerce business, said it is turning toward universities where it has made headway in e-commerce recruiting for help with new hires. But company executives say finding that talent requires tenaciousness. While not disregarding MBAs or computer science whizzes, IBM is now eyeing creative types for e-business, said Jane Ellingwood, IBM Global's national recruiting executive.

"We like the fresh perspective," she said. "We're hoping it makes us a cooler place to work and that it becomes a more interesting place and a more interesting culture."

Nonetheless, more students are joining smaller firms and start-ups, said Sherie Lockshin, assistant director at Berkeley's Haas School of Business in California.

Lockshin said the number of this year's graduates who chose to work at a traditional consulting firm fell 9 percent from last year's class. Meanwhile, the number of MBA students who headed to Internet or e-commerce related firms increased by 14 percent.

Universities have also adapted to the change in the marketplace, recently adding e-commerce courses, Web design, or Web engineering to some MBA programs.

Last spring, Berkeley's Haas School of Business launched four new courses: New Media Publishing, Internet Marketing Strategy, Business-to-Business Commerce, and Designing E-commerce Solutions.

"Everybody wants to be in this business," said Berkeley's Lockshin. "These are the jobs where [students] are taking risks. They want to do something that's new, and they want to make an impact on how things are done."