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Question for Tony Restell

#1 Question for Tony Restell
14/03/2008 17:26


Hi Tony,

Looking for your opinion: If it is wise to join a new consulting in this time of economic meltdown. Will not this recession cut the consulting opportunities? Can't understand how is there still so many openings in your website

Appreciate others views as well

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#2 RE: Question for Tony Restell
19/03/2008 12:41

Mars A Day to Raj (#1)

We are not in an economic meltdown.

I question your judgement - and sense - if you are talking this up into a global economic catastrophe.

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#3 RE: Question for Tony Restell
19/03/2008 14:37

anon to Mars A Day (#2)

The IBs are looking at 15% reduction in headcount. You can speculate how that factors down through the rest of the finance sector, but I'd imagine it would have nearly finished by the time it gets to consultancies, and defo gone by the time it gets to accountants.

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#4 RE: Question for Tony Restell
19/03/2008 14:58

Mars A Day to anon (#3)

Hmmm... it is the brokers in the IB sector which are in the worst position, suffering as they are due to increased demands to collateralise debt, so given that Bear has gone Lehman was next in the queue to go... and they are looking at 5% staff reduction, mainly in the US, and many of the retail banks (with the exception of Lloyds TSB) have retained their credit teams, just not expanded them. Further, hiring at tier 2 banks still looks to be strong, as are emerging markets like the middle east and baltics. On the news this morning markets were up following intervention from the central bank in the US, and none of the central banks in Europe have exhausted their ammunition to keep us moving. Sure hiring is down across the board, but this is more a shift towards contracting against permanent hires, which is reflecting the need for a more flexible work force while everyone waits to see what is happening. The big consulting firms are slowing down a little, but generally still hiring. Marketing hiring is actually up.

So where is the cause for panic? It's in the media talking the situation into crisis to make news, and clipping economist analysis down to soundbites because let's face the reality is less interesting than the notion of a global meltdown. This is not the Asian Flu, this is not the Dotcom bubble bursting. This is a downturn in the market, and soon enough it will start to reverse and we will expand again, but perhaps more conservatively and with more consideration of the consequences of over extending our positions.

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#5 RE: Question for Tony Restell
19/03/2008 15:40

ZB to Mars A Day (#4)


I think one of the most compelling and enduring aspects of this whole saga is the sheer predictably. How can so many people become so rich for doing so little. Capital was in abundance, credit lending was profligate, unscrupulous lending was rife and risk management was all but superfluous. The financial markets are very innovative to the point of delusion. A money for nothing culture has fostered this situation. I suspect now on will be increasingly stringent lending criteria, balance sheet restoration, capital preservation and prudent and efficient investment taking. If not then this will very quickly turn into a palpable disaster.


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#6 RE: Question for Tony Restell
19/03/2008 16:25

Mars to ZB (#5)

I would have to agree ZB; I suspect we will pull back from recession but with lessons learnt and it will be the subprime segment which suffers most in the medium term as credit tightens in the future.

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#7 RE: Question for Tony Restell
20/03/2008 08:22

Tony Restell ( to Raj (#1)

Apologies for the tardy response, been on the slopes enjoying the fresh powder these last days!

Re. your question. Irrespective of market conditions, you have to remember that staff attrition at almost all consulting firms runs at 10%+. So just to keep the business standing still (ie. no business growth), firms need to recruit the equivalent of 10%+ of their headcount each year. This attrition rate doesn't fall that much in a recession, as there are always people looking to leave consulting for industry, set up their own businesses, etc.

It's also worth remembering that even in the last consulting downturn, the industry experienced uninterrupted revenue growth - it's just that growth was only 5-6% p.a. rather than the 15% p.a. that would be the norm in a better market.

What it IS fair to say is that during harsher economic times, not all practice areas enjoy the same growth. Hence you might see headlines about firms culling staff from one practice area - even though as a whole the firm might still be a net recruiter and be hiring aggressively in other areas.

One final point - we surveyed our clients last month re. their hiring intentions for 2008 and the results surprised even us. On average the 150+ participating recruiters responded that they expect to make slightly more hires in 2008 than in 2007 (and 2007 was a strong year for recruiting). So for now at least the firms aren't envisaging any reduction in their hiring needs.

Tony Restell

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#8 RE: Question for Tony Restell
20/03/2008 11:14

Tez to anon (#3)

Accountants never get hit, regardless of economic climate. Just remember, its the accountants who are also the liquidators/administrators.

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#9 RE: Question for Tony Restell
23/03/2008 13:10

glass half empty to Tez (#8)

good points by Tony.

If you are a graddy or relatively junior consultant, you will find that when the market tightens, you may not end up doing what you thought you would be doing in a consulting firm. However, as you are not yet a "specialist", you are a little easier to move around. Also, you are a cheap resource to the hiring company. Unless a consulting firm cuts a large number of you, the cost saving is relatively negligeable. I would say that as a graduate or early career hire, consulting is a very strong option even in tough market considtions because of the wide learning curve. My suggestion is that the first to go when a consulting firm culls within a given practice area will be the highly paid vertical specialists within that practice area. They are the ones who are the most expensive, the hardest to re-deploy and had the responsibility for keeping the practice area afloat!

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