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Market jitters - cause for concern?

 
#1 Market jitters - cause for concern?
22/01/2008 17:15

Tony Restell (Top-Consultant.com)

I'm intrigued to hear readers' thoughts about the current market jitters. A few conference calls I've been on with consulting firm Partners in the last weeks would seem to suggest that there's been little impact on consulting firms so far - ie. firms still busy and utilisation rates still high. Recruitment targets for the year still seem to be very aggressive by and large as well.

How are you all seeing things on the ground? Are there any signs in your businesses yet that 2008 could be a difficult year for consulting. Or should we just be expecting a year of slower growth than we've perhaps become used to?

Anecdotal evidence anyone?

Tony Restell

Top-Consultant.com

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#2 RE: Market jitters - cause for concern?
23/01/2008 00:53

anon to Tony Restell (Top-Consultant.com) (#1)

As a cross-section of a medium-sized global practice...

We have found that large business transformation projects sold last year have continued on their planned track. They have not been scaled back and have had budgets extended where necessary to accomodate scope growth. However, there is noticably more tension around managing operating budgets, limiting business travel costs, etc. As a result, these projects are sustaining our core utilisation levels.

A number of small and medium-sized projects sold last year were put on hold towards the end of the year, but are now expected to be delivered by mid-2008. These will likely sustain utilisation for our specialist consultants through the first half of the year.

Right now, the market is proving tough to sell into - in the short term a number of our repeat clients are putting off business decisions which will influence their buying decisions.

Although numbers are not statistically significant for comparison, the oil & gas clients seem more willing to push on with projects than those in the pharma or FS industries. For our client base, this reflects the pressure for improvement that the oil & gas clients face. Rather than the FS clients being particularly hard-hit by the financial climate, they are being more circumspect about when they do the work and how they resource it.

The biggest issue for our "pipeline" is the difficulty we are experiencing to sell work for 2008, particularly large transformation projects. This is starting to bite in our forward indicators and could hit our utilisation hard in the second half of the year. Our year-to-year comparison figures are skewed by the fact that we ramped up capacity last year, so we have put ourselves under some pressure to sell large volumes of work.

We are expecting to cut recruitment targets to nil net levels, but potentially rebalance capacity. We will keep the same total headcount, allowing attrition in low-demand areas and going to market only to swap out the skillsets we employ directly. As a firm, we are trying to move towards a greater sub-contractor component in our delivery - the current trend will catalyse this.

Overall, I expect a demanding year. Certainly not the worst compared to those of recent memory, but I expect a few "lessons learned" summary decks from those years to be pulled out of cupboards and dusted off as we develop our plans this year.

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#3 RE: Market jitters - cause for concern?
23/01/2008 10:09

aNon to anon (#2)

Though not quite as in depth an observation as the previous poster, I’m currently doing a project for a major British bank, and I know that their budget for new projects in the department I’m working for has been cut by 40% this year.

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#4 RE: Market jitters - cause for concern?
23/01/2008 12:04

Clive (aka The Clivester) to aNon (#3)

I'm sure they'll be an impact. And if I was in a position where I needed to earn money (ever again), I'm sure I'd care.

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#5 RE: Market jitters - cause for concern?
23/01/2008 14:26

hmmm to Clive (aka The Clivester) (#4)

So Clive, you have enought money to never have to work again, which suggests you have enough money to do whatever you want. And you spend your time on top-consultant.com? Are you on crack?

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#6 RE: Market jitters - cause for concern?
24/01/2008 09:47

Mike to anon (#2)

Strategy seems to be suffering more than most. Practices that serve the private equity industry or work in the Financial Services space have directly suffered as a result of the credit crunch. The next months will be key though - at present most firms are still engaged on assignments signed several months ago. The real question is whether new assignments will be signed in the coming months or whether utilisation rates will tumble as the current raft of assignments come to an end...

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