If the events of 1999 proved anything, it was that consulting firms can get caught just as flat-footed as any of their clients when marketplace demands change or a product or practice area reaches the end of its natural life cycle. And when this happens, layoffs are no longer something that happen to other people. They happen to consultants, too. Nearly a quarter of the 300 firms surveyed by The Ransford Group last year had downsized a portion of their consulting staffs — and another 36.5% were considering downsizing in the near future.
None of this comes as a surprise to Bill Worth (not his real name), a former Ernst & Young senior manager who was laid off during a purge of the firm's financial services practice last summer. But it was not just low-level consultants who were cut. Worth estimated that 40 percent of the practice's managers and senior managers lost their jobs.
For its part, E&Y says Worth's estimate is too high, and that the 500 jobs the firm admits to having cut were evenly distributed across all practices and levels in the consulting group, with no one area being disproportionately impacted. What E&Y does not dispute is that the layoffs may have been avoidable had its consulting organization been able to transition more quickly.
"There was a major slowdown in the practice as clients began looking to move quickly to e-commerce solutions, while the firm was still concentrating on large system integration projects that take anywhere from eight months to two or three years to develop and implement," says Worth. "As a result, utilization in the practice was off by 20 to 30 percent for about six or eight months before the layoffs." Despite the signs of a slowdown, Worth did not expect a layoff until the ax fell.
What is going on?
Despite the spate of downsizing in 1999, the consulting industry as a whole is growing apace, with strategy firms, operational consulting firms, and IT strategy firms all doing particularly well. "Firms that are not doing well are those that rely heavily on ERP and Y2K consulting," according to Dean McMann, CEO of The Ransford Group, a New York–based professional services consulting firm. "For obvious reasons, Y2K consulting is reaching an end, while ERP is also slacking off."
In some respects, slowdowns in certain practice areas are to be expected as part of the natural business cycle. "Major business transformations run on a 3- to 5-year cycle that is becoming much faster as companies continually look for new processes and new methods of supporting them," says John Higgins, partner in charge of consultant training and leadership development for KPMG in Montvale, NJ. In the past, it was reengineering, then ERP, and now clients are focusing on e-commerce. "One thing is clear: The landscape is going to change," he says, suggesting that the spotlight might swing back to supply chain management to support e-commerce growth.
Protecting yourself
There is little consultants can do about the larger market forces that can push firms toward layoffs. However, they can view the events of 1999 as a cautionary tale about the need to remain marketable while also keeping an eye on developments in their firms and among their clients that might indicate signs of trouble ahead.
Become a well-rounded consultant. Not surprisingly, the consultants most at risk for layoffs tend to be those with very specialized technical skills but weak overall consulting skills. Therefore, consultants who are worried about their job security in their current practices should be working on their consulting and client relationship skills. When demand in a practice is as high as it was in ERP at its peak, "almost anyone could get a job as a consultant, because the knowledge base was so scarce," says Derrick Cone, vice president for technology with Business Solutions Worldwide, a small SAP consulting firm based in Phoenix. Now that the market is tighter, people who are getting the jobs have more flexible capabilities and strong business knowledge. "If you have strong technical skills, that is a real asset, but there is no substitute for being a well-rounded consultant," he says. "Never underestimate the importance of client relationships and the ability to get on well with clients."
"Consultants who are well rounded and able to bring their consulting skills to bear on new areas, like e-commerce, do the best" when things are slow, agrees McMann. "Some firms cherry-pick consultants to retool and retrain, and then invest in them by putting them on client projects as learning experiences without billing the client."
As a preventive step, consultants who are worried about their marketability would do well to begin expanding their horizons now. By being proactive and taking advantage of available training opportunities, Fred Moran, a KPMG senior manager based in Radnor, PA, retooled his skill set to take advantage of his background in purchasing and make a smooth transition from ERP consulting to business-to-business e-commerce work. For Moran, the key was his ability to "focus on one area rather than take a broad brush approach," he says. And "you don't throw away your old skills." For example, Moran now relies on his ERP skills to help clients manage their interface between e-commerce systems and their back office.
Look around. If you are unsure of how to make a change informally, consider formally looking for a new job within your current firm. KPMG has an internal jobs system that allows current consultants to look for other opportunities within the firm. The system matches a consultant's capabilities and experience with the staffing needs of the firm's various practice areas. Once the match is made, the consultant meets with the practice leader for a standard job interview. "You can make an inquiry just on general interest or if you perceive that you are at risk somehow," says Higgins. "If you are feeling queasy about the future prospects of your practice, you should also discuss your concerns during the performance management process."
Put your career needs first. Worth urged consultants to put their own long-term career needs above the firm's immediate staffing needs. "You get asked to work on projects as a favor or for political reasons, but you should focus on the things you want to be doing and not let the firm dictate your opportunities," he says.
This political balancing act is a challenge for every consultant that requires just that — balance. "Not every engagement will necessarily be the one you want," says Moran. "You have to find a balance that gets you where you want to be with a pit stop here and there." To make sure those pit stops are only occasional, Moran suggests that consultants pay attention to promises made and promises kept by their firms. "If you are always being told that you will get the projects that interest you, but you don't get them, that is a problem," he says. In that case, it may be time to evaluate your career with the firm and prepare to make a move.
Worth agrees, saying that being laid off has forced him to view himself in a more entrepreneurial light and to concentrate on staying marketable. "Things change quickly, so you have to be prepared to change quickly."
Be alert for warning signs. Despite the surprise that often accompanies layoffs, there are usually plenty of warning signs that things are not going well. That is why, although it is tempting for those in large firms to just go along with everyone else under the firm's guidance, consultants need to be aware of what is going on in the marketplace. The first sign of trouble can be an inability to meet goals for billable hours and difficulty getting on new client engagements. Another sign of potential trouble is an erosion in your billing rate. This is "an early indication that there is market complacency for your skill set," says Higgins.
Take stock. If you do get laid off and your severance package will finance it, it is a good idea to take some time to reflect on your career and polish your skills before looking for a new job. "Take stock in what made you successful," says Higgins. "Look beyond specific assignments to identify what you are qualified to do, and you are likely to find that you have many capabilities to leverage into another practice area." Even though ERP consulting may not be as much in demand, the skills those consultants developed in their work might be. For example, an SAP analyst with intimate knowledge of the manufacturing module will have an opportunity to bring a new perspective to how Web-based technology can be integrated with the system. By the same token, Y2K consultants have had a unique opportunity to get into client applications and understand their interdependencies, which is an experience that can be quite valuable in other practice areas, says Higgins.
Don't give up on consulting. Despite recent layoffs, the good news is that many consulting firms are still hiring, making it easier for consultants to move on to new positions. "Don't lose enthusiasm for the consulting industry," says McMann. "With too much money to be made and too many skills to develop, this is too great an industry to abandon."
Sidebar: Power Points:
• Slowdowns in certain practices are to be expected this year as part of natural business cycles. Despite a spate of downsizing in 1999, the consulting industry as a whole — strategy firms, operational consulting firms, and IT strategy firms — is growing apace.
• Consultants who often fall victim to downsizing tend to be those with very specialized technical skills, but less developed overall consulting skills. Consultants should look to seek out training that can bridge gaps in their skill sets and allow them to more easily migrate into new opportunity-rich areas.
• Consultants who find themselves doing work on projects for "politcal reasons," or as a favor for a partner, may be forfeiting valuable career-building experiences elsewhere. Consultants should not let the firm dictate their opportunities.
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