Consultancy buyers look to cut costs

7 November 2011

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7 November 2011 | Rebecca Ellinor

Cost cutting is back on the agenda for consultancy buyers as a result of the uncertain economic outlook.

This is the finding of the latest Sourceforconsulting.com quarterly report, released today, which tracks the buying trends of about 200 organisations with a combined annual consulting spend of around £2.5 billion. It said the threat of sovereign insolvency and a European banking crisis is forcing businesses to look at cost cutting.

Ed Haigh at Sourceforconsulting.com said: “What will be interesting is to see the form cost cutting takes. Much of the easy work has probably already been done and it seems unlikely that many companies would have relaxed their grip on costs too much in the intervening period, given the ongoing economic uncertainty.”

Difficult economic conditions mean nearly 40 per cent of consultancy buyers expect to spend more on advice about operational efficiency over the next six months – an 11 per cent increase on the number from the same period last year.
The report said half of private sector clients (outside of financial services) are expecting to seek advice from strategy consultants, with manufacturing, pharmaceuticals and energy the sectors in most need of their assistance.

A third of clients are also expecting to increase expenditure on IT consulting. However, demand looks as though it may be far weaker in the financial services sector than it will be in the rest of the private sector as regulatory work is driving the agenda in this sector.

The report also found that with record levels of unemployment across Europe (recently hitting a 17-year high in the UK), HR services are increasingly in demand. As people are laid off, HR consulting firms are getting involved in helping organisations to reshape.



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