Working on a project-by-project basis has its perks: a variety of assignments, people, and places. Yet consultants have a unique challenge in that they must follow the work and maintain the right mix of skills to meet the needs of tomorrow’s clients. In a recent TechRepublic poll, our members predicted that the healthcare, government, and financial services sectors would have the greatest demand for consulting services this year.
To find out why these sectors are experiencing growth and how consultants can make the most of these opportunities, we spoke with Dean McMann and Eric Goldfarb. McMann is the CEO of Ransford, a firm that tracks trends in the consulting industry and provides consulting for professional services firms. Goldfarb is the CIO of Global Knowledge, a provider of IT education solutions and certification programs.
What skills will help consultants benefit from these opportunities?
This article discusses the trend toward increased spending in the government, healthcare, and financial services sectors. Look for a follow-up article next week regarding the skills consultants will need to capitalize on these trends.
In good times and bad, the U.S. government is always a buyer
Of the 253 members who answered this TechRepublic poll (see Figure A), 36 percent said they thought government would do the most hiring in 2002. Healthcare was a close second with 30 percent, and financial institutions came in third with 20 percent.
The government sector “is always a buyer in good times and bad times,” McMann said. Traditionally, the State Department, CIA, and FBI are government’s “big spenders,” and this year will be no exception, he said. Beyond the normal expenditures, government agencies will be beefing up security in every area in reaction to the September 11 terrorist attacks.
“Right now the government is a particularly strong buyer because there’s a push in technology around security,” he said. “That’s going to be at least a four-year heavy-buyer cycle. They’re only beginning to gear it up right now. You’re going to continue to see that that’s the healthiest part of the [consulting] industry right now.”
Gartner has also predicted that the U.S. government will be an avid consumer of IT products and services, with spending expected to reach $23 billion by 2005. The increase in spending is based on “the proactive response to Sept. 11, an increase in defense and intelligence technology implementation, and the continuing adoption of outsourcing contracts.”
TechRepublic members seem to agree. In a discussion about the economy, database administrator Neal Bishop, who was laid off from Intel Online Services seven months ago, said the federal government is one of the few entities where a consultant can find work.
“The only bright spot is the federal government,” he said. “This area has picked up since September 11, especially in the classified IT environments.”
Bishop spent three-quarters of his career working for the U.S. government and has seen a renewed interest in his experience.
“Lately, I have received numerous calls from contractors looking for currently cleared personnel,” he said. “However, my TS [top secret] tickets became inactive seven years ago; therefore, they become disinterested.”
Healing the healthcare industry
The healthcare industry may be seeing a boom due to its need to become compliant with the Health Insurance Portability and Accountability Act (HIPAA). HIPAA was signed into law in August 1996 and includes provisions for health insurance portability and administrative simplification requirements, among others. Its goal is to increase the efficiency and effectiveness of the healthcare system by encouraging the electronic transmission of certain health information. Two major components of the act—covering 1) transactions and code sets and 2) privacy—have compliance dates of October 2002 and April 2003, respectively.
Consultants who are familiar with the standards will be in high demand to guide institutions in their compliance efforts. In a TechRepublic discussion, one consultant said HIPAA is “a hotter issue than Y2K ever was and complex enough for consultants to retire on!”
In addition to HIPAA work, McMann said consultants might find work managing mergers and acquisitions as the healthcare industry is in a “roll up” cycle.
“Healthcare is such an interesting field in that, since about 1930, it goes through cycles of rolling up for efficiencies and then breaking apart. Right now, we’re in a roll-up cycle,” McMann said. He said evidence of this cycle could be seen in the many instances of hospital consolidation and HMOs buying hospitals.
Gartner has predicted that the healthcare industry will increase its spending on IT external services from $11.6 billion in 2000 to $21.6 billion in 2005. “HIPAA will place greater pressure on the management of administrative tasks and as the trend toward national health chains continues, there will be a greater payer market consolidation. Patient rights legislation will place renewed focus on customer care in the payer segment and on quality of care in the provider segment.”
Money’s where the money is
Financial institutions are in a race to beat the June 2005 deadline for straight-through processing (STP) and T+1 (trade plus one day), a plan to reduce the manual processing of trade information and physical movement of check payments and securities. Securities now clear and settle three business days after the transaction. Under T+1, trades would clear and settle on the next business day.
Besides trying to overhaul their procedures to meet the STP guidelines, financial institutions have been in the process of changing their business models during the last five years, McMann said.
Banks and other lenders are blending services like investment banking, brokering, and insurance, and traditionally business-oriented institutions are now competing to provide professional services for individuals, McMann said.
“So we have Merrill Lynch, as an example, fighting for our banking business, meanwhile, they’re fighting for our American Express business, our corporate cards, and they’re also fighting to take over all the executives’ personal investing and home financing,” he said. “So Merrill Lynch is coming to us with one package to address what four or five companies are doing today.”
The upside for consultants is that these organizations need project managers, technological support, hardware, software, and training to create integrated systems and processes, he said.
Gartner forecasts modest growth in financial services’ IT spending with a focus on three key areas:
- E-business optimization
It predicts the insurance industry, in particular, will seek improvements to computerize paper-based and labor-intensive processes.
How are you preparing to serve these sectors?
Are you enrolled in new certification courses? Are you networking with folks in the healthcare, financial services, or government sectors in the hopes of landing some new contracts? Tell us how you’re preparing to serve these sectors.