This Year Is Likely To Be A Disaster For Billings

By Author: FIRELEAVES
Total Articles: 49
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It is as if a neutron bomb has hit the consulting industry. Pay a visit to your local management-consulting shop, and you will find that the building is intact but many of the people are gone. See the rows of empty desks, once filled with eager young MBAs. Read plaintive postings on www. vault. com, a yuppie website devoted to the rants and raves of the downturn. Listen to consultants, poor things, complain about having to work for nothing.

The past 12 months have been an annus horribilis for strategy consultants. McKinsey, the most patrician of the lot, has been mocked for its advice to Enron, Global Crossing and Swissair, all of which have gone bust. The elite strategists at Bain face a continuing lawsuit in Boston over claims that, in the late 1990s, they provided two distinct Cartier Replica reports, one for a fonner boss of Club Med and another for some board members who tried to oust him. Earlier this year, Arthur D. Little, arguably the first strategy-consulting firm, collapsed after management had let costs in its research and development projects soar ...
... out of control.

This year is likely to be a disaster for billings. Some firms, including McKinsey, have called on partners to put up extra capital. To be sure, the economic downturn has depressed corporate spending. Yet companies struggling with a dismal economy presumably need advice now more than ever. So why, since the peak in 2000, have top consultants cut staff by up to one-third? By one estimate, revenues at the top firms are shrinking by 10% a year. From this depression, predicts one firm's analysis, the industry will return to its

ate 1990s levels only in 2007 .
One reason is the aftershock of the dotcom boom, which led headcounts at the top- tier firms -- McKinsey, Boston Consulting Group, Bain -- to double after 1994. Despite many lay-offs, says Ken Favaro of Marakon, mother strategy consultancy, the industry still has perhaps 30% overcapacity.

Worse still is the crisis of confidence in consulting, according to Jon Moynihan, boss of PA Consulting , i British management and technology-consulting firm. He says that clients feel betrayed by some consultants' past advice to spend heavily on dotcom projects. It seems they are now wary of the latest bright ideas of even he best strategic firms -- if there are any.

Nowadays, strategy firms are fighting like wildcats for any available scraps of business, pursuing clients they would once have shunned and even offering to work practically pro bono . As clients bargain for lower Fees, some consultants have taken on less lucrative work for governments, especially America's, which is increasing its demand for consulting.

What does the future hold? Even as "pure" strategy projects suffer, the broader range of consultants seem to be thriving. Accenture, a huge Tag Heuer Replica Watches consulting outfit specialising in IT installations and outsourcing, had a stellar summer. Human- resources and pension consultants have prospered, thanks to a move towards outsourcing. When confronted with the choice of a one-stop shop or a specialist boutique, more clients are opting for focus.