Don’t Worry About the State of the Stock Markets; Just Be ready For the New Economy When it Emerges

Consultants and other professional services firms are wholly dependent on their clients’ ability to spend money for their own growth. With the market behaving like a bad dream this can be quite disconcerting. So what should we do to survive, never mind grow? That is the real question.

Unfortunately, most people are “looking down” right now. This is a problem. I’m not suggesting that consulting firms and other professionals shouldn’t be doing their best to cut costs and manage risk. Any business owner should take responsibility for managing his/her business intelligently. What I am suggesting is that the market gyrations that we are currently experiencing right now (including the credit crunch) should not be what companies focus on.

At some point in the not so distant future, maybe six months maybe two years, things will loosen up. The thing is that when the dust settles the economy may not be something we recognize easily. The rules may have changed a bit (literally in the case of highly regulated markets like banks). So consulting firms should spend a little time getting their houses in order so they may prepare for the inevitable downturn, but then they should aggressively remake their businesses to be well positioned for the “new” economy. So what does the new economy look like?
Here are a few trends that we are focusing on:

• Workforce Mobility – We believe that when the economy emerges from the current malaise most traditional companies, even those that were reluctant to outsource in the past, will begin to view outsourcing as a required means of doing business. This will reflect both the maturity of today’s technology and a general reluctance to operate with a significant cost base (see my posting from October 8th titled “Creating Collaborative Products for a Troubled Market”). A much larger percentage of the pool of eligible workers will be contractors not FTE’s going forward.


• Workplace Automation – Although this trend has been ongoing for years, we believe that the trend will continue and will reach into markets that have traditionally been reluctant to pursue technology solutions in the past. A few notable markets that we are looking at are the legal and recruiting markets. More on that later.


• Information Aggregation – In the 1990’s the financial services industry in particular enjoyed centralized data resources provided by data and content aggregators. In the new economy even companies whose information has existed in a silo will begin to demand integration between internal content and outside sources. This might include the medical profession, for example. As more and more patient data becomes available in medical systems there is a market opportunity for those firms that find a way to blend patient metadata with outside data (keeping HIPAA compliance requirements in mind, of course). This will not only help the medical and insurance industries reduce costs and risk but could result in the development of improved therapeutic methods for the population at large as well.


• Outsourcing – Yes, outsourcing. At some point protectionists are going to realize that the power is where the growth is. That is going to be Asia in the next decade. Europe has simply regulated itself into a stagnate state We can look inward as a society and hold off the inevitable for a while, but in the end western companies need to be more global in order to be well positioned for the next boom-time. That means that even small companies need to begin to develop relationships with offshore partners or else they risk being left behind. All the old arguments for not outsourcing simply do not hold water anymore and if managed properly, a blended solution that uses onshore and offshore resources can actually create high paying jobs at home (see http://www.jlroy.com/Documents/jr_Outsourcing_IBJ07_rev.pdf for more information on this subject).
  

Despite the state of the economy I am optimistic that there is still plenty of opportunity, if not in the short-term then certainly in the medium to long-term. The trick is to make decent predictions and try to position yourself for the inevitable changes.