So when will the pain end?

The latest news comes this week from Cap Gemini Ernst & Young, where we heard of significant cutbacks in the European telecommunications area. All the other major consultancies have tightened their belts to the point of constipation. It’s not pretty out there right now.

On the other hand, we’re bullish that the worst is over. A senior partner at one of the major strategy firms brought up a very good point the other day: Clients buy consulting when times are good because folks need a competitive advantage.

And when times are horrible, consulting is still a logical buy to bring a company out of the doldrums. Booms and busts foster paranoia, which drives spending.

The current malaise is reflective of the so-so business climate. To borrow a fun phrase from a Texas colleague, clients put off spending when the economy “t’ain’t neither here nor there.”

Client paralysis drives consultancies crazy. Selling services is difficult enough considering the long sales cycle and ephemeral nature of the product. Waffling clients don’t help the cause.

We’re at a point where business has to pick up because the clients’ business will either get better or worse. Sounds strange, but the best thing for the consulting industry could be a worsening economy.

Heard on the street
“Creative Destruction: The Road to Innovation” is the theme for the Association of Management Consulting Firms 55th annual meeting in Paris, Oct. 10-12, 2001. BCG’s John Clarkeson will receive the Carl S. Sloane Award for Excellence.

About the author

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 2001, Consulting Information Services, LLC. Reproduction is prohibited. Quotation with attribution is encouraged.