The consolidation in the ICT services industry has led to a number of mergers between consulting and professional services organisations and technology partners, says Gerhard Badenhorst, director of EPI-USE Systems, a global provider of IT solutions.
Badenhorst says the merger of IBM and PwC Consulting is a prime example of a consulting firm partnering a technology provider to counter potential losses in revenue from negative market perceptions about consulting and technology projects.
"These mergers have introduced a new kind of competitor in the market, one that is able to deliver more demonstrable value by integrating its business and technology skills sets. These players are ideally positioned to compete in the billion-dollar global business process outsourcing (BPO) market," he says.
The BPO market is attractive for merged consulting-technology companies, and provides the opportunity to make a great deal of profit out of the inefficiencies of the bigger multinational or global companies, by supporting functions such as IT, finance, human resources, administration and logistics, he says.
However, in order to ensure economies of scale management, Badenhorst says long-term BPO contracts and a high number of transactions with top-tier companies are needed to ensure success in the market.
"The uptake of the merged consulting/technology players to the BPO market signifies a departure from their traditional roles of trusted advisors and management consultants, to that of service providers - providing either a technology or BPO service to clients, governed by strict service level agreements and penalties.
"Projects that are smaller in cost, but higher in impact, will become the norm. These projects will be governed by stringent measures to ensure value-based delivery and strategy alignment."
Badenhorst says the resulting consolidation will place pressure on the middle-market to interface with primary clients` business processes and ICT. This will result in a trend to acquire the same type of enterprise resource planning applications as their upstream clients, or invest in technologies that will ensure a seamless interface with them, he says.
Typically, companies that will not invest in similar systems will be replaced by those that make such investments in order to become and remain part of their primary business networks, he says.
Share
