CXO

Who will climb out of consulting's black hole?

The announcement of layoffs at Scient, Viant, and Lante gives columnist Tom Rodenhauser pause to ask, "Can e-consulting firms claw their way to profitability?"


Smack dab in the middle of the holiday season, Scient, Viant, and Lante announce layoffs—a move that surprises no one, considering their dismal third quarters. Yet the denial phase seems to linger. Was it really only last year that we talked about the e-consulting revolution?

For these three, following in the footsteps of the other e-consultants is particularly painful. Just a few weeks ago, Scient boldly projected above-industry growth for the year. And Lante seemed resolute in asserting that no layoffs were imminent. Then, in a stark admission that business has indeed slowed, Scient axed 325 billable pros. Lante remains more optimistic about the pipeline; most of its cuts were support staff.

The industry can accept, however, the tragicomedies playing out at iXL and Xpedior, among others. Those companies, which have gone through a second round of cuts, have now moved from intensive care to the respirator. The cuts at Scient, Viant, and Lante are more disturbing.

There’s a reverse analogy about rising tides raising all ships: Sinkholes tend to pull down everything in the vicinity. Right now, we’re seeing the e-consultants try to claw their way to profitability. Some will make it. Most won’t. And mercifully, many of those firms will be put out of their misery.

Heard on the street
Given the current state of affairs with the pure plays, you will hear much speculation about big firms swooping in to buy the stragglers. It’s good water-cooler gossip, but don’t expect an influx of deals. There are only three or four e-firms worth buying. The rest will be poached clean long before anyone figures out a valuation.
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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