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Oct 15, 2008


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Hi Morgan,

There will be pressure to avoid large transition costs moving into engagements. I predict we are going to see a number of smaller-sized engagements to begin with, in addition to a few new large global engagements where the winning providers streamline much of the initial costs over the duration of the deal.

This is providing a great opportunity for advisors - project costs of $1m-2m to manage outsourcing deals are not going to be a major issue when you consider the size of the tasks at hand. The larger project costs to help with M&A are going to be challenged, but when you consider the size of some of these M&A deals, the banks will have little choice but to spend the money - especially with the brokerage / bank mergers,


What will be interesting to see is how companies balance their desire for increased outsourcing activites with the short term need to reduce or control spending. Will companies cut back on using expert advisors (while at the same time they are laying off the very staff needed to run their internal initiatives)? Will there be increased pressure to reduce one time expenses such as transition costs? How will companies achieve this and how will outsourcing providers react?

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