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July 22, 2008

Consulting in a down market

Does consulting thrive of suffer in a downturn? It’s hard to say. Easy to do a beat up and say “Of course it thrives”, but from my experiences during the 1991 downturn in my own country that doesn’t necessarily hold true.

However, there are some significant factors that start to impact on consulting during these times.
  1. Droves of people join the freelance industry. Companies go bust, people get retrenched, and downsizing is bound to become the fashion again. (If it ever went away)
  2. Discretionary spending dries up.
  3. Non-core, or non-essential, activities also start to wind down.
  4. Droves of companies are, undoubtedly, going to be forced out of the consulting game.

While this means that the number of areas where consultants can target is reducing, there are entirely new areas that are surging forward.

This is not a normal downturn. At present it seems confined to the US and to countries that are closely intertwined with that economy.

All the while growth BRIC economies continue to bubble up, as do economies with a strong commodity base. (The Middle East, Australia, and so on)

This means that even though there is a downturn, American companies need to shore up their cost controls and continue to battle with imports, particularly in manufacturing.

It means that all resource companies are under a lot of pressure to reduce costs while maximizing output to get the most out of current high costs. (All booms bust, so make hay while the sun shines of course)

Utility companies all over the world are struggling to keep up with rampant urbanization and continuing population growth. When combined with issues such as the change in climate this has turned out some incredibly large projects, particularly in the area of water resource management. (Check the news on Brisbane Australia and Saudi Arabia for two intriguing stories of large cities drying up)

Tech companies continue to see a renaissance since the 2001 wipe out, and are surging on the back of SaaS and Social Media explosions.

So for consultants, the current rules governing the creation of compelling offerings tend to revolve around:
  • Make sure that all of your offerings are dripping with real tangible and cashable value. The sort that falls into the increased revenue or reduced costs quadrants.
  • Be able to prove it…
Look for active sectors and hit them where they need help.
  • Resource companies need productivity improvements,
  • utility companies need to know how to fund asset management,
  • and infrastructure managers (roads, tunnels etcetera) need to know how to manage aged and weakened assets.
  • Self help is always a winner. Particularly for people who are looking to regain lost ground or to move into a space they see as cheap right now. (For example, right now Real Estate is on sale… any ideas to help potential investors there?)
  • And there will be many industries and companies that are served by boutique consultancies that are wondering who will help them now that their previous supplier has gone broke.
Life is what you make of it, and that goes for your consulting career also. If you look for opportunities they are everywhere, but if you try to keep moving when everything around you is in constant flux then you are either missing the boat, or you could even end up as a statistic.

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