Sunday, March 21, 2004

Consultants Find Goldmine in Outsourcing

Management consultants, rev up your horses. Roll up your sleeves and get ready with the client pitch. A little bit of attention on countries like India and the Philippines won’t hurt either.

As more and more companies realize the benefits of outsourcing, CEOs are predicted to tap consultants in mapping out their strategies.

According to the recent Wired magazine article about outsourcing to India, the surge in outsourcing means good business for consulting firms.

No wonder even giant tech firms like IBM (remember the acquisition of Price Waterhouse Coopers?) and HP are now beefing up their consultancy services and closing outsourcing deals as well.

IBM and HP recently sealed long-term multi-million dollar deals with manufacturing giant Procter and Gamble.

But independent consultancy firms need not be intimidated. According to Kennedy Information, spending on consultancy services is expected to jump up to 10% in the next two years, driven by the need for advice on sending tech jobs abroad.

US companies are expected to ship more than 200,000 services offshore in the near-term. With annual salaries of programmers in countries like India a mere fraction of their US counterparts ($8,000 versus $70,000), it makes business sense of to try outsourcing.

Outsourcing, however, is never downright simple and like any business decision, involves a lot of risks. For some efficiency, CEOs call upon management consultants.

In the last few years, the study also noted that major consultancy firms have all beefed up their outsourcing divisions. For consultants, outsourcing makes business sense as well.