Smaller rivals challenge global seven consultants

In the wake of the decline in overall corporate IT spending, the ‘global seven’ IT consulting giants find themselves facing increasingly fierce competition from smaller competitors. As a result, consultancy rates at these companies have fallen by as much as 50%, according to a report from market analyst AMR Research.

AMR’s ‘global seven’ consists of IBM Global Services, EDS, Accenture, Computer Sciences Corp (CSC), Cap Gemini Ernst &Young (CGE&Y), Deloitte Consulting and KPMG Consulting. According to a review of these companies’ proposals for the coming quarters, many of their long-term contracts are up for renegotiation, and consequently a number of deals are being signed at lower rates. More than ever, says AMR, the big consultancies are willing to bargain for new projects.

Additionally, there has been an upsurge in enquiries from users wanting detailed information and recommendations on second-tier and more specialist consultancies. AMR says that there are many benefits to choosing to work with the smaller, second-tier companies: they have cultivated valuable vertical market expertise, they frequently have more senior experience, they are more flexible with customisation and methodology, and they provide better customer service.

However, the global consultancies will continue to dominate in one area, according to AMR. Second-tier providers have not proven themselves to be particularly strong in implementing new technology releases such as enterprise software upgrades. This is an area where the big consultancies’ ability to partner and gain training from the key software vendors works to their advantage.

Hourly rates for enterprise software skills, 2002
Source: AMR Research

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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