Outsourcing: Death Knell for Consulting

Is outsourcing good or bad for the consulting industry? The evidence appears to go both ways. Conventional wisdom has it that outsourcing and consulting are countercycli­cal. During periods of economic growth, organizations have been willing to spend some of their profits on consultants to help them develop new strategies, address new markets, or build the operational platform needed for future growth. But in downturns, clients shy away from paying expensive consultants and turn to out­sourcing companies to take problems off their hands.

In the last few years, we’ve seen outsourcing suppliers grow quickly while their consulting rivals have gone through successive rounds of layoffs. But for every consulting firm that has been cannibalized by outsourcing, another has responded to the need for developing sourcing strategies by helping with supplier selection and contract negotiation, change management, and process reengineering. What’s been poison for the geese has proved to be sauce for the ganders.