It paints a picture of an industry reacting to economic conditions, where global powerhouses are forced to compete with smaller, niche service providers.
Kennedy Information questioned clients that accounted for more than $1 billion in consulting spending over the last 12 months, and claimed global spending on IT and business consulting will grow by 3.7% in 2004.
It also found that over 87% planned to purchase strategy or strategic planning consulting services through 2005. This is a reassuring find for the consulting sector, which has suffered from a widespread freeze on discretionary spending from clients, and whose credibility has taken a battering following the Enron controversy.
UK-based technology consulting firm Conchango said that business consulting is currently one of its fastest-growing business areas.
However, the report found that established consulting giants face a further challenge with clients creating a more level playing field by issuing standardized requests for proposals, as well as placing a greater emphasis on price. This in turn is opening the door to specialized firms that may lack the relationships of the leading firms.
The survey did not highlight the impact of the rise of offshore services providers, which are posing a further threat to the established consulting order by adding client-facing consulting operations to their low-cost development and integration capabilities.
Tata Consultancy Services, India’s largest software services exporter, is aiming to become one of the world’s 10 largest consulting firms by 2010, when it aims to have revenue of $10 billion and a workforce of up to 80,000.
Respondents to the survey were also asked to rate consulting firms in terms of their overall performance.
IT consulting providers including Accenture [ACN] and BearingPoint [BE] generally received high ratings. Interestingly, IT consulting firms were more than twice as likely as other consulting firms to have the success of their projects based on demonstrated revenue potential and positive ROI.
Human resources firms outperformed other consulting firms in client perception ratings, with HR outsourcing and consulting firm Hewitt Associates [HEW] ranking highest amongst HR firms in the areas of expertise, quality, and thought leadership.
Human resources consulting and outsourcing is an increasingly competitive market, with IT services companies such as IBM Global Services [IBM], Accenture and Affiliated Computer Services Inc [ACS] all attempting to stake a claim.
This article was based on material originally published by ComputerWire.
