Jeff Baum, vice president for external relations at EDS, told ComputerWire that the company had begun consultation with the 250-300 partners, or officers at the loss-making division.

He said: There are preliminary talks about giving AT Kearney officers a greater ownership stake in the firm… This would be in line with the structure of other high-value consultancy firms.

AT Kearney made an operating loss of $17m in the fourth quarter of 2004, on revenue that fell 10% to $193m. In the full-year period, it made an operating loss of $10m on sales that fell 6% to $806m. The division has 3,200 employees, and is headed by Henner Klein, who took over as managing officer in December 2003.

EDS originally acquired AT Kearney in 1995 for $600m, in a move that set the model for the wave of mergers between IT services firms and business consultancies some seven years later, triggered by the post-Enron break-up of the accounting firms’ consulting divisions.

Arthur Andersen’s consulting operations were dismantled and acquired by a number of IT services companies including KPMG spin-off BearingPoint Inc and SAIC, and IBM Global Services bought PwC Consulting in a $3.5bn deal in October 2002.

IBM has said that its purchase of PwC Consulting has given it the high-level business re-engineering and industry expertise to help it grow its business process outsourcing activities, where it takes on the running of its clients’ human resources, accounting, and other administrative functions, as well as the underpinning technology.

EDS is also building up its BPO activities, and has highlighted supply chain and procurement outsourcing as a target growth area, which is one space of synergy with AT Kearney.

The consultancy is particularly strong on advising clients on how to optimize their supply chain, and has worked on projects with clients such as retail giant Staples. It claims to have helped clients save more than $12bn annually since 1995 on more than $100bn in annual purchases across 3,000 purchased categories.

EDS has made several disposals in the last three years in order to improve its financial position. The company sold its subscriptions fulfilment business to AMREP in 2002 and its Consumer Network Services unit to Fiserv in November 2002. EDS also got a $2.05bn cash injection following the sale of its PLM software business to a consortium of investment groups last year.