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IT outsourcing consultants: Same great advice, new low price

Stephanie Overby | Feb. 26, 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.

Combined with his lower rates, Strichman can do a job at up to half the total cost of a larger firm, he says.

Price may be the biggest selling point for the independent outsourcing consultant and boutique advisory firm, but it's not the only one. While mature outsourcing consultancies and business advisories hew closely to their own established practices, "our size allows us the flexibility to blend our processes with a client's process," Ruckman explains.

What's more, flexibility can sometimes translate into increased speed. "I feel like we are moving at warp speed being able to adjust our business model to the market business requirements," says Craig Tobin, managing director of Lone Tree, Colo.-based Eventus Sourcing Group, which he formed last February after a corporate sourcing career at GE and taking an exit package from Accenture.

Working with an independent outsourcing advisor or small consultancy also may foster more trust with clients. "What you see is what you get," says Susan Tan, IT services and sourcing research director for Gartner. She's alluding to the "bait-and-switch" tactics that big firms sometimes employ, when they" trot out their best consultants during the early days, only to replace them with less experienced staff over time.

Phil Fersht, who recently launched Horses for Sources Research, an independent consulting firm, after leading AMR Research's outsourcing practice and working briefly for offshore outsourcer Cognizant, concurs: "Clients genuinely get what they pay for--no junior 'number crunchers' here."

Outsourcing's David v. Goliath

Of course, going with the big guys has its benefits. "From a client perspective, the biggest difference is that most independents don't have a bench," explains Ruckman. "If a client wanted to kick off a large project in two weeks, I would have to ask for three or four [weeks] to build a team."

Thus, the upstarts must partner to scale, and that can only get them so far.

Moreover, they don't have the name recognition of the big firms. "Nobody ever got fired for buying IBM. That philosophy holds true [in sourcing consulting], with a small modification," says Strichman. "Clients think, 'If one of the big consultancies screws up, they will be in trouble. But if you screw up, I will be in trouble."

While independent consultants and small firms get most of their new business from their existing networks, hiring them can require a bigger leap of faith. It's easier to sell a CEO on an outsourcing plan if it has an Accenture or TPI seal of approval. Even with the 40-plus experienced consultants he works with (as independent contractors, not full-time employees), Tobin of Eventus Sourcing Group says there's a misperception that he can't offer customers "board-safe" decisions or that his company doesn't have the financial resources or company experiences that come with working with billion dollar organizations. In fact, Eventus today serves several Fortune 100 companies including American Express and GE, he says. The deals just start smaller at the beginning.

 

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