Introduction

Consulting is a large (i.e., US$116 billion) and dynamic market at the high end of the overall IT services industry. The consulting market is complex, with a variety of models and flavors, delivered by a large and diverse set of suppliers, ranging from IT services firms to technology product vendors to management consulting firms. Historically, buyers and suppliers viewed the role of consulting in driving outsourcing contract very differently. Buyers realize that the outcomes or by-products of consulting may lead to a need for an outsourcing service, whereas suppliers maintained a premise that consulting engagements with buyers can lead to their subsequent winning of an outsourcing contract.

This report examines the purported linkage between consulting and IT outsourcing as exhibited by the IT services market. However, the linkage is complex and indirect. It can be beneficial for buyers through creation of downstream opportunity. Suppliers see the linkage and try to go after it through investment in consulting services. The report examines how both parties deal with the linkage and elaborates on the best practices both buyers and suppliers should follow in a consulting and an outsourcing engagement.

Scope

• Definition of the IT consulting market size, segments, and models
• Analysis of linkage between drivers of consulting and IT outsourcing
• Recommendations for buyers and suppliers to carve out a winning strategy

Contents

This research focuses on examining the linkage between consulting and outsourcing in the IT outsourcing marketplace. The key Insights are presented in four sections: overview of IT consulting, buyer’s view of the consulting-outsourcing linkage, supplier’s view of the synergies between consulting and outsourcing, and sources of consulting-outsourcing synergy disconnect. For instance, the third section discusses the supplier’s view of the synergies between the two services:

• Suppliers realize that buyers exhibit this linkage and often try to leverage it, which is evident from ITO suppliers acquiring consulting companies or investing into building a consulting arm
• The most common notions we observe in supplier strategies are that business consulting increases chances of winning outsourcing deals and IT consulting leads to downstream outsourcing work. However, few suppliers have been successful in grabbing the purported benefits