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Job custs in IT-consulting

#1 Job custs in IT-consulting
13/10/2008 12:17


Hi there,

how does your forecast looke like for full service and IT management consultancies within the next 6-12 months? Are they gunned by the economic downturn.

I can see, some firms are installing a hiring freeze, while Accenture and IDS Scheer are making some redundancies.

Which areas (let´s say departments) would be affected most in your opinion? Financial services, but which else?

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#2 RE: Job custs in IT-consulting
13/10/2008 12:17

uncertain to uncertain (#1)

sry, I meant "cuts" of course...

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#3 RE: Job custs in IT-consulting
17/10/2008 12:28

The next Bond Villan to uncertain (#2)

Almost every industry will be hit by the financial crisis. Some more so than others of course. The healthcare and consumer staples ( supermarkets etc) will not be hit as hard as the demand for their products is not as discretionary as in other industries ( e.g. electronic gadgets, computer games, plasma TV's etc).

Regarding IT service companies, their success in the comming 12 months will depend on 2 things:

1. Where their revenue comes from- if they get a large part of their pie from , say financial companies, then the IT companies will be in trouble. If a large part of their revenue comes from the pharma/life sciences/healthcare industry, then they should be somewhat ok.

2. How aggressive their salesmen are. In difficult times, potential customers will see IT as 'discretionary spend' ( they can live without it). They will cut back on those services. To counter this, IT service companies need aggressive and creative sales team. The sales team has to be finance focussed ( show the financial projections of doing a project), devise creative solutions, and really differentiate themselves from their competition. These are all hard things to do, and thus I think we will see CEO's getting personally involved in IT sales/business devt efforts in uncertain times.

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#4 RE: Job custs in IT-consulting
17/10/2008 12:59

Mars A Day to uncertain (#1)

I'm taking a stab at this one...

Financial Services IT spend will be reduced but not culled to the extent everyone seems to expect: insurance will increase spend massively to ensure every single part of the organisation is monitored for risk purposes, and their systems are way behind what needs to be in place. Hedge Funds and Interbroker Dealers will also increase spend, at a lower level - as trades become thinner, and they need to find new ways of hedging positions (swaps evidently don't work) they will need more sophisticated systems to enable faster, more complex and safer trades - Kervial managed to get away with it as he knew how to circumvent the risk controls form his middle office days and so new software will be in place to prevent a repetition of this in every major bank. Boutique banks will increase spend to take advantage of the BB collapse, and the ongoing round of mergers and acquisitions will mean legacy systems need to be integrated.

ACN, IDS Scheer and the others were overdue a cull anyway - the boom times were creating bloated, oversized and over exposed organisations staffed by a tranch of average to medicore individuals; in any downturn hiring continues apace, but the focus will be on quality hires who can be monetised quickly or monetise themselves. This applies to IT even more than other areas of consulting.

It is a discretionary spend, but any major corporate with a wide scale systems implementation and roll out underway will be carried on by both project momentum and that they will already have budgeted the bigger part of the cost. No CEO in his or her right mind is going to turn round and say to the board, ok lets just drop this global SAP roll out for now, and neither are they going to say, sod our new web platform, who needs customers anyway? Who needs CRM anymore? Lets go bust quietly and with no fuss...

Accountancy will slow then speed up again - watching the pennies, audit is critical, as will insolvency expertise. Hence bankers turning up at Big 4 now. the Big 4 will get fatter and bigger as they feed off the carcas of the IB meltdown.

Strategy will slow - a little - then return to form as cost reduction meets bone and companies revert to growth strategies as the only remaining option.

PE/VC will keep hiring - most of the funds are already accumulated, but it will be choppy as some will have significant funds tied up in banks in administration.

Goldman will now be in the pocket of Warren Buffet. Like I said in a previous post - a neutered by surviving bank, and that is what it is.

the biggets winners will be people developing artificial intelligence - bankers will buy it as they evidently lack any to begin with.

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