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Dot coms came & went, but left a lasting impression
on the way business is done. They challenged every established 'business
rule', many of which were past their useful life & had become
corporate traditions. Although dot coms went out of business, smart
old age companies adopted many of the dot com practices. Most industries
went through a long lean patch after the dot com crash & consulting
was one of the most hit.
Net Consultancies
The Internet is not just another medium for advertising, a distribution
channel, a marketing brochure, a mode of communication for pre sales/customer
support, a storefront, a virtual office or a cheap TCP/IP network.
With Internet enabled services making their presence felt during
the dot com boom, both new & old economy companies made a dash
for the online world. New age consultancies sprung up to meet this
particular demand. When the dot coms went out of favor at the stock
market, many new age consultancies had to shut shop, not being able
to migrate quickly from their large dot com customer base. Old economy
consultancies went on a downsizing spree to preserve their bottomline.
What remained of Razorfish, Scient and Lante were picked up by SBI
& Co. (renamed SBI Group Inc. on 21st October). On 22nd October,
Framfab acquired the London operations of SBI. Sapient is the only
large net consultancy that has flourished by reinventing itself
every time a crisis arises.
Auditing & Consulting
SEC's attempt at separating accounting & consulting met with
stiff resistance during the consulting market boom of the 1990s.
With increasing concerns from clients after the Enron aftermath,
most auditing firms doing consulting work (consulting revenues was
a major contributor, in most cases accounting for more than half
of the firm's revenue) either spinned off a separate division or
sold off their consulting arm. Auditing assignments were considered
more valuable & the relationships with clients were at a higher
level.
Enron was followed by a series of scams & the need for a rebranding
exercise became imminent. PricewaterhouseCoopers became Monday (now
IBM Business Consulting), Deloitte Consulting became Braxton, Arthur
Andersen Consulting was renamed as Accenture and KPMG became Bearing
Point. Such was the change in the landscape of consulting that it
was virtually unrecognizable. No wonder millions were spent in branding
exercises.
Business consulting firms in IT
It all started with the software with the longest life (&
probably the largest bills), SAP. Auditing firms who offered consulting
to their clients by virtue of their contacts in the top management,
started offering IT consulting. SAP required BPR before implementing
the ERP package to maximize its value. IT consulting today accounts
for more than 30% of the consulting industry's revenues. The majority
of IT work is executed in the consulting firms' software development
centers in India, although other countries, such as South Korea,
Philippines, the Baltics, Hungary, the Czech Republic, Malaysia,
Argentina, Brazil, Chile, South Africa, Poland, China, Mexico and
Russia are having their share of the cake too. Sapient pays $67K
for a tech worker (3 years experience) including benefits, bonuses
& perks in its home town Boston as compared to $17K it pays
in New Delhi, India. Their business model was so attractive that
IT firms like HP & later on IBM bid for PWC Consulting (the
latter successfully). Smaller software development firms like Bangalore,
India based Wipro Ltd. also chose the acquisition route to growth
by buying out the global energy practice of US-based American Management
Systems Inc followed by Newton, Massachusetts-based NerveWire, which
provides IT consulting services to the financial services sector.
Changing Terminologies
With IT consulting garnering upward of 30% of consulting revenues,
the term 'consulting' itself has come to mean “IT consulting”.
The term 'advice' & 'advisory role' now connote traditional
consulting roles. 'Consultants' is also a designation provided to
business development executives who take a 'consultative selling'
approach.
Looking Beyond the Big4
There are many a companies out there that are looking out for
an alternative to the Big4. With specific vendors for various IT
needs, their opinion on a packaged solution cannot be termed neutral.
Coupled with their high cost, inexperienced consultants working
onsite on projects
With competition getting stronger & the decreasing IT budgets
of large organizations, the Big4 started pitching for smaller contracts
that typically were in the domain of mid sized consulting firms.
Boutique consultancies that specialized in specific areas also felt
the heat from the Big4 as IT became a common point of contention
with clients approaching both the Big4 & the specialized consulting
firms with the same projects. Research institutes, universities
& their faculties remain a threat too.
Although there have been a large number of changes in the consulting
sector, the effect of these changes are not very noticeable in a
few cases. To cite an example, although the industry restructuring
& branding exercise was a very visible process, client centric
changes like profit based compensations are still the exceptions
than the rule, with a survey pegging the figure at 3% of the projects
in its survey. For the consulting industry to move out of US shores
& create a market in developing economies, cosmetic changes
in themselves are not enough. Concentration in a few large American
business hubs can spell doom as the industry realized during this
economic slowdown. European offices have been bringing in good business
in the past couple of months & consulting firms should make
an attempt to extend the same to other locations.
An entrepreneurial flair
Faster turnaround time
Rational billing rates/ price sensitive consulting
Result oriented/ risk sharing
Relaxed dress code
Corporate governance
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