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IT outsourcing consultants: Same great advice, new low price

Stephanie Overby | Feb. 26, 2010
The economic downturn has taken its toll on the IT services industry, and consequently, on the consultancies that swelled to support corporate outsourcing efforts in better days.

Another challenge associated with the soloists: While these outsourcing consultants can bring with them double-digit years of experience, they' have to leave behind many proprietary methodologies, frameworks and other intellectual property they used when they worked for the big firms.

The market's need for the larger, general IT or pure-play outsourcing consultancy isn't likely to go away anytime soon. "Solo consultants and the small consultancies they set up certainly have a place in the client portfolio of work. They are clearly most suited to work that requires experts as well as situations when clients need consultants as coaches, rather than as arms and legs," says Gartner's Tan. "But large scale applications work is still best done by big firms who have the scale, methodology and sources of cheap labor from offshore delivery centers."

The Future of Outsourcing Consultants

Going independent isn't easy for a seasoned outsourcing professional. "Establishing a pipeline and managing the slow periods have been the biggest challenges," says Ruckman.

Solo outsourcing consultants say the need to fly under the radar for the first year in order to stay out of trouble on the non-compete front further complicates their efforts to build a project pipeline. And even in the leanest early days, newly independent consultants can't take every job that comes their way if they want to be successful. "We don't have the scalability, and we have to be selective in the clients and projects we take on as we continue to build the organization," says Tobin.

Then there are the tax and incorporation headaches.

Despite those challenges, Fersht, for one, is upbeat. "Clients prefer to work with boutiques these days," he says, noting that he knows of about twenty small consultancies that have sprung up in the last year or so. "They're more flexible and have higher quality staff," he notes.

In the end, the increase in independent outsourcing consultants is less a major market shift than a sign of the times. "I'm aware of a handful of sourcing professionals who set up their own shop," Ruckman says. "As companies look for alternatives to execute deals with limited budgets, this trend could grow. I wonder if the economy will force more companies to look at the ROI of a deal and include consulting cost in the ROI. If the answer is yes, this will be great for independents."

For his part, Ruckman keeps communication lines open with his contacts at the larger consultancies and could see himself suiting back up for them if his pipeline runs dry or they make him an offer he can't refuse.

Strichman, who still occasionally hears grumbling from former employers concerned he's stealing their business, insists there's plenty of room in the pond for advisors of all sizes.


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