Outsourcing

E-yikes! Consultancy carnage continues

A shakeup at iXL is just one example of the massacres taking place in the e-consulting industry these days. Columnist Tom Rodenhauser offers his take on what the bloodshed will leave in its wake.

Bill Nussey’s abrupt resignation as president of iXL capped a week in which e-consultants took a beating on Wall Street. How bad was it? Viant shares fell 41 percent in one day. The gods of hype giveth and taketh away with equal vigor.

Skeptical investors and analysts (in that order) have awakened to a simple truth in consulting: Demand for services, and delivery of said services, are two different things. Nussey, who probably deserves less blame than he’s receiving for iXL’s woes, tells The Wall Street Journal that client demand has altered over the past several months, and “…the abruptness with which the change has occurred is going to be legend… it is going to be some tough going.” It was a moment of candor from a guy who recently was named one of the 10 most influential “new” consultants by a trade magazine.

At the same time, iXL founder U. Bertram Ellis, who is stepping back into the fracas, says demand is still “huge,” and the company merely needs “grizzled veterans” to cut costs and refocus on clients.

Huh? Despite such contradictory statements, both fellows are right. Demand for e-services remains high. But the client of choice is a cash-rich multinational with patience, not a bootstrap dot com with attitude. Nussey was widely praised by the investment community for melding iXL’s mishmashed rollup into a singular presence. But like others, iXL is finding the Internet sandbox a shifty place to play.

Many people will chortle over the irony: Net consultants who wowed clients and investors last year are now adrift and in need of some tough love. But clients should be justifiably concerned with the looming e-consulting shakeout. Remember, these are firms that promised to re-invent entire industries. Strange how the consulting industry remains stubbornly predictable.

Heard on the street
Mercer Management Consulting’s purchase of Swiss-based St. Gallen Consulting Group adds 70 consultants and brings to 22 the number of MMC offices worldwide. Mercer follows the rules of proper dining etiquette with its consulting acquisitions: Never bite off more than you can chew, and swallow before you speak.
Inside Consulting is written by Tom Rodenhauser as a free weekly supplement to The Rodenhauser Report. The report informs senior advisors and business executives of consulting trends and best practices. Subscription cost is $295 per year for 10 issues. Copyright 2000, Consulting Information Services, LLC. Reproduction is prohibited. Quotation with attribution is encouraged.
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