Internet-based companies are well known for outsourcing non-core competencies to IT consultants so internal staff and resources can be dedicated to getting to market.
Those IT consultants who enter into contracts with dot coms often run into problems—the project requirements might change mid-stream as the client company alters its business model, the consultant might see his work stopped short when the company dissolves, and worse yet—the consultant might never receive payment for work completed if the dot com goes belly up.
Gene Gutt, a consultant with Internet Planning Services—a firm based in Chico, CA—has found that few of the dot-com startups he’s advised become viable businesses. “Most of my consulting is spent turning people off when they find out what’s involved, and they decide to investigate the brick-and-mortar route because it gives them more control, and they understand it,” Gutt said. “All of the time spent talking to potential and budding dot coms results in no starts, because when they find out what’s really involved, they back off.”
Gutt added that among those that do become dot coms, he’s had difficulty convincing them to invest properly in technology.
“The more information you try to give them, the more they are frightened, especially when the discussion begins to address different types of servers that are needed and why,” he said. “It’s fear more than money. They don't have faith because they don't understand the technology.”
Thanks to the results of our recent informal survey on dot-com failures and their effect on IT consultants, we discovered that lots of consultants like Gutt are running into problems with dot-com clients.
Nearly 140 TechRepublic members told us how they’re responding to the struggling market and how they’ll contend with it in the future. Here’s what they said.
Has your client base diminished over the last year because of the struggling dot-com market?
- Not at all—40 percent
- Not much—31 percent
- Somewhat—23 percent
- Yes, a great deal—6 percent
During the last year, has your firm faced increased competition with other consultants for traditional clients?
- Yes—59 percent
- No—41 percent
Has your client base shifted toward more brick-and-mortar and traditional clients as a result of the dot-com chill factor?
- No—53 percent
- Yes—47 percent
Have you failed to receive payment for your services from any former dot-com clients?
- No—72 percent
- Yes—28 percent
Will you be less likely to accept a contract with a dot com in the future?
- No—73 percent
- Yes—27 percent
Do you believe the dot-com market will eventually rebound and create more business for consultants?
- Yes—76 percent
- No—24 percent