| | By Mick James
It is more difficult
to gain an overview of
the consultancy industry
than many other sectors.
There are very few
reliable statistics out
there and getting hard
information out of
consultancies themselves
is like getting blood
out of a stone. I chat
away to individual
consultancies but I'm
examining the wood one
tree at a time and it's
a bit of a
self-selecting sample –
people rarely invite me
down to their offices to
discuss impending
bankruptcy.
So after a year of
being exposed to
life-threatening levels
of unbounded optimism I
thought it might be a
good idea to check in
with a recruitment
consultancy to get a
different perspective on
what's going on. The
cheekily but
informatively named
Selecture has, as you
might guess, been
specialising in
management consultancy
and IT recruitment since
2001.
Selecture director
David Lancefield
confirms that many
consultancies are seeing
a less rosy year ahead, | |
|
| | but are by no means
consumed by the doom and
gloom that seems to have
enveloped most economic
commentators.
"People aren't
expecting it to be as
bad as 2002," he says.
"We've still got a
growing economy and
there are a lot of major
projects in the pipeline
such as the Olympics.
And while the UK and the
US may have slowed down,
we're not seeing that in
India or China."
He points out that
the last downturn was
much scarier for
consultants than for the
economy in general, and
that governments are now
prepared to act much
more aggressively to
prevent downturns
turning into full-blown
recession. Consultancy,
as a discretionary
spend, is always first
on the list for
potential cuts, but this
time around the industry
is better prepared.
"We're seeing a lot
of demand for senior
managers and directors,
people who can talk to
the likes of CIOs and HR
directors," says
Lancefield. "It's all
about cost reduction and
that's not going to
change."
In fact the | |
|
| | back-to-basics trend in
consultancy means the
industry is in a much
better shape than in
2002, when it was not
only deeply mired in the
worlds of venture
capital and dotcom
startups but had lost
control of its cost
base.
"Companies are more
intelligent now,
salaries have not gone
up that high," says
Lancefield. "Margins
have been going down all
the time and that will
continue until something
new comes along."
Lancefield points out
that the industry hasn't
been able to match the
huge productivity gains
delivered to clients in
the late 1990s. Not only
that, it has also had to
contend with the rising
power of procurement
keeping the lid tightly
on external costs.
Consultancies have
responded by making
changes to the way they
operate. Lancefield says
that salary structures
are flatter now, with
less overall difference
between the bottom and
the top, and also a
marked erosion of the
step between partner and
the grades immediately
beneath. Consultancies
are also opting for more | |
|
| | flexible working models
to keep a handle on
fixed costs.
"We see a lot more
use of contractors now,
and we're doing a lot
more recruitment in that
area," he says. "Clients
only want a specific
skillset for a finite
length of time. We're
also seeing a lot of
backfilling –
consultancies don't want
to commit to recruitment
until they’ve definitely
got work – it's JIT
recruitment nowadays,
people don’t recruit
consultants to sit on
the bench."
Nonetheless,
consultancies would
prefer to recruit
permanently where
possible, although with
it now being acceptable
to move jobs every two
or three years until you
land a senior role, this
doesn't necessarily mean
that much. What
consultancies are keen
to avoid is the
situation earlier in the
century.
"A lot of
consultancies cut their
headcount by 25% and six
months later they had to
hire the same people
again," says Lancefield.
"Maybe they've learned
from that."
It's possible that we | |
|
| | are at the end of the
‘talent squeeze’ and the
candidate-driven market,
but consultancies aren't
going to let go lightly
of the resources they've
laboured so hard to
garner over the last two
years. One positive sign
that Lancefield sees is
an increase in
pan-European working.
"We see a lot of
demand in Europe, in
Germany and France and
now in Eastern Europe as
well," he says. "It's
amazing how many
consultancies are
operating globally now –
even smaller companies
can do things that were
previously reserved for
the likes of Accenture
and PwC. The
infrastructure is there
for them to do it, and
they can mobilise people
much faster than
before."
Even if things do
slow down a bit, this
may be a welcome period
of consolidation for
companies that have been
on a frantic growth
curve for the last three
or four years.
So the message from
the recruiters is that
the next year may not be
all that bad.
| |
|
