Andersen's Legal Woes Mount With Federal Indictment

"We're going to see a big rush of competition. The old way of giving preference to cronies isn't going to happen anymore," said Christine Ferrusi Ross, an analyst at Forrester Research. "Companies are going to want to put work out for bid and show that the best company for the job was chosen."

Andersen provided auditing and consulting services to Enron. The Chicago-based firm's alleged role in Enron's collapse has prompted other former Big Five firms to make changes in the way they do business. For example, KPMG Consulting,spun off from KPMG in 2000,last week said it plans to change its name.

Ross said the former Big Five's drive to erase potential conflicts of interest, however, could dilute their IT consulting services, which require steady investment to stay on the leading edge of technology.

As a result, IT services work will be spread among more companies, including Plano, Texas-based EDS, said Mike Thomas, president of global sales for the integrator's E-Solutions unit. "We don't have to do the kind of hurdle-jumping the other folks in the market are doing."

Andersen's problems continued to mount last week. The firm was indicted on obstruction of justice charges by the U.S. Department of Justice and refused to plead guilty to criminal charges in connection with the Enron scandal,despite admitting it signed off on and shredded documents related to Enron's bogus accounting practices. Former Federal Reserve Chairman Paul Volcker has been heading an independent oversight board at Andersen.

Reported merger talks between Andersen and both Deloitte Touche Tohmatsu and Ernst and Young also have collapsed.