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Oct 06, 2008

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Phil,
Consolidation there will be! However, those who are not yet ready to DIE have 2 key options which are by all means mutually inclusive:

1) Build Strategic Alliances
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The players who are not ready to 'eat' or 'be eaten up' at this point have a 3rd compelling option. No, its not to 'struggle independently', the option is to 'leverage each other collaboratively'. Atleast at Ephlux we are finding it a very useful strategy to team-up with various smaller consulting companies and leverage on their niche specialities and customer-base, while helping them with a global leverage in order to combat these tough times.

If you look at it objectively, the scenario is a REAL WIN-WIN. Small-to-mid sized consulting companies in the US and UK markets are currently under 2 pressures which were never stronger before (atleast after dot-com burst):

ONE - They have a pressure of maintaining sales volume in the wake of declining business and increasing competition.
TWO - Once they secure the business they have a NEED to deliver cost-effectively with HIGH quality.

Offshore counter-parts on the other side of the globe have their future cash-flows from US and UK getting more and more doubtful. This is a time to be used to create 'winning agile business teams' across the organizational and geographical boundaries in order to combat this mounting threat (or is it an opportunity?)


2) Geographic Diversification of Revenue streams - Eye on Middle East
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Go to Middle East. Atleast thats what our immediate focus at Ephlux is (although we've already been working for Saudi and Dubai customers for past few years). There is an immense opportunity out there for the ones who have the RIGHT mix of cultural, professional and geographical positioning in order to tap this super-liquid market. Add a good mix of US/UK success stories, establish and leverage upon the alliances in the Middle East and entice and offer innovative technology-backed business models which can profitably convert the excessive cash available in the market in to sustainable long-term ventures.

Hope that helps!

Ali

Danny and Sam,

Just heard Xchanging acquired Cambridge, so looks like it's starting...

PF

Undoubtedly.

There are bargains to be had in the market today. BearingPoint's market cap is down to less than $60 million today. Of course it remains to be seen how these deals get financed. As more and more companies lose out on their financial sector business, there will be a greater pressure to merge with a competitor.

Phil,

This is great insight - thanks for sharing. Today's stock market carnage should accelerate this consolidation even further,

Danny Thompson

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