SOURCE: Kennedy Consulting Research & Advisory

Kennedy Consulting Research  & Advisory

December 07, 2009 15:28 ET

Mid-Tier Firms: Squeezed on All Sides

New Research From Kennedy Reveals Where the Pressure on Fees Hits Hardest

PETERBOROUGH, NH--(Marketwire - December 7, 2009) - New research from Kennedy Consulting Research & Advisory, "Fees and Utilization in Consulting," indicates that mid-tier firms are feeling the squeeze the most this economic downturn. On the one side they have smaller niche firms; on the other side, they have larger global consultancies. And, forcing fees down from above, are cost-conscious clients looking to get "the most bang for their buck."

The challenge for mid-tier players lays in having less potent brand strength than the top-tier firms and the fact that they are often perceived as more commoditized than their specialized boutique competitors. Within the strategy consulting marketplace, in particular, second-tier firms are so consumed by competing with the Big Three and fending off flank attacks from other firms that they simply cannot afford to show the pricing flexibility that would help them to win new business.

"The fact that many mid-tier players find themselves between the proverbial 'rock and a hard place' makes it especially critical for them to have a clear picture of their direct and indirect competitors' plans and prices, and the remarkable level of discounting that has taken hold during the downturn," says Greg Baranszky, a Managing Director, Kennedy Information Advisors. "Exactly how they are being impacted varies slightly from service segment to service segment. In the operations management consulting segment, for instance, many mid-tier firms are being buffeted by not only mounting fee pressures but also difficulties in effectively cross selling services beyond their core competencies."

Specific consulting service segments aside, the primary factor deterring mid-tier firms from scaling their fees is the substantiated fear that the lower prices would too quickly become the long-term norm. In contrast, the market as a whole is less likely to hold third-tier firms to lower fees when the economy rebounds. Lower stratum firms are using this opportunity to decrease their fees and take full advantage of the market while they can.

Kennedy's research "Fees and Utilization in Consulting" indicates that rates will grow closer to pre-downturn levels in the coming year. Analysis provides consulting firms and client organizations with an unprecedented survey of fees and utilization for tiers one, two and three of the consulting marketplace, clearly illustrating variances in rates from 2008-2009, and critical projections for 2010.

About Kennedy Consulting Research & Advisory

Since 1970, Kennedy Consulting Research & Advisory, a division of Kennedy Information, has been the world's leading source of market analysis on the Management Consulting and IT Consulting industries, serving the most highly regarded professional services firms and Fortune 500 companies across the globe.

Kennedy provides accurate and reliable market sizing and forecasts for consulting services world-wide; needs analysis and vendor profiling for buyers of consulting services; timely and insightful intelligence on the top consulting firms in their respective markets; and operational benchmarks that measure consulting performance. Kennedy Consulting Research & Advisory's research spans multiple service areas, client vertical industries, and geographies. Kennedy's stand-alone consulting advisory unit, Kennedy Information Advisors, provides results-oriented strategic guidance to buyers and sellers of consulting services.

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