FRAMINGHAM, 25 FEBRUARY 2010 - The economic downturn has taken its toll on the IT services industry, and consequently, on the consultancies that swelled to support corporate outsourcing efforts in better days. Over the last two years, everyone--from the IT outsourcing arms of the biggest general business advisories (the KPMGs and Accentures, for instance) to the consulting divisions of IT service providers (the IBMs and HPs) to the leading outsourcing-specific consultancies (the TPIs and Alsbridges)--has been hit with layoffs, consolidation and upheaval.
But what's been difficult for the consulting industry and the community of IT outsourcing experts it employed may have an upside for IT organizations in need of external expertise. Some of the talent that once logged $300 an hour for the likes of IBM, TPI or EquaTerra have set up shop for themselves, and--minus the overhead of their big bosses--are available at as much as half the cost.
Mark Ruckman is one example. He spent more than 12 years at IBM Global Services in a variety of roles from outsourcing delivery to sales. His tenure at Big Blue was followed by a stint at outsourcing consultancy Alsbridge, where he led clients through RFPs, vendor selection and contract negotiation. Today he provides the same service for his clients as a solo consultant--for about 30 percent less.
After leaving Alsbridge last February, Ruckman says, he had little choice but to go independent. The once-booming business of high-priced outsourcing hand-holding had gone bust.
Michael Engel, who was laid off from Deloitte last spring with a "large contingent" of sourcing consultants, echoes Ruckman: "I suspect in most cases becoming an independent advisor was more of a necessity than a strategy."
Engel went on to form Sylvan VI consultancy with five fellow Deloitte refugees.
The need for these consultants to strike out on their own is serendipitous for that segment of clientele looking for lower cost, targeted outsourcing advice. "The major consulting firms were laying off or not hiring," Ruckman says. "But working with my network I discovered companies still required consulting support, but they didn't have budgets for large consulting teams."
The Outsourcing Soloist's Selling Points
Independents and smaller firms are cheaper for a number of reasons. They don't have as much overhead. They often work virtually, instead of travelling on the client's dime. And they only have so many hours for which they can charge.
"When someone at a big firm is put on a deal, they are expected to charge 40 to 50 hours per week--every week--for a long period of time. They internally allocate people by the month," says Adam Strichman, who worked for IBM Global Services and Meta Group before selling his six-person benchmarking firm Nautilus Advisors to Alsbridge and going solo in 2008. "The 'butts-in-seats' model is not what I do. My hours are often 20 to 40 percent less than big firms'."
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