PAC’s hiring today of John Leigh, a BPO industry heavyweight, reflects the general trends towards the growth in the market for custom consulting. Leigh, previously at BTGS, Gartner, META, Ovum and Vertex, joins Pierre Audoin Consulting at a time when numerous firms are also benefiting from the growing demand for more strategic consulting. Major new hires like this certainly show the higher profile and greater momentum of firms like PAC, which has consulting as a natural compliment to their research activities. But the real ‘story’ is about the way that larger firms are fulling back from consulting.
Some of this demand is simply tricking down to PAC from firms like Gartner and Forrester. Those two firms have experienced huge, long-term, upwards trends in their stock prices as a result of more profit focussed business policies, in particular price rises. Over the last two years, Forrester stock has more than doubled (from $16.49 to $36.98 today) and Gartner has quadrupled (from $8.38 to $38.53). A rising tide lifts every boat, and the recovering US economy underlies their performance. However, both firms have moved towards more profitable work. Consulting is generally less profitable than selling already-written research, therefore the price-to-value ratio of consulting offers at many analyst firms have worsened for clients, freeing up time for analysts to increase their research productivity.
In turn, that means that Gartner and Forrester are leaving money on the table, which clients are now spending on smaller firms. PAC is certainly not the smallest, but it remains the case that it is picking up some of the consulting projects that might have otherwise gone to Gartner, especially from vendor clients looking into go-to-market tactics and more strategic questions where a personal answer cannot be provided by off the shelf research.
PAC is certainly one of the first best-places to benefit, since its business is perhaps three-quarters consulting. Even so, the hiring of people like Phil Carnelly, who previously led Ovum’s EuroView and software services, and Leigh reflects a certain upgrading of the consulting side in analyst firms. We might also mention Carter Lusher and Jonathan Yarmis, similar ‘big game’ hired by Ovum. This need to develop more strategic consulting capacities in the second-layer of analyst firms reflects not only clients’ need to work at a higher level but analyst firms’ needs to maintain a more strategic connection to their clients.