Consulting Firms Enter Price War

The days of $350 per hour consultancy fees are just another hazy memory among Chicago's consultancy professionals.

A tight economy and corporate cutbacks on spending for IT consulting are resulting in a price war, the likes of which few have seen. The price cuts, occurring in the Chicago area, are a sign of a trend that is eroding earnings at most consulting firms, including the Big Five.

"I don't think we've ever experienced this kind of downturn," said Richard Reck, the dean of Chicago's information technology consultants and partner in the software, Internet and information services practice at KPMG LLP. "We have a glut of IT services businesses. There's just too many of them."

Widespread discounting began last January and is showing no sign of slowing. Consulting firms are slashing partner fees by 50 percent, offering two consultants for the price of one, and taking on smaller projects for free with the hope of landing larger engagements in the future.

The services most likely to be affected by the price cuts include large custom applications, system integration, and system outsourcing.

You may like these other stories...

For the first time since 2006, more than 50 percent of CFOs believe the US economy will show signs of improvement over a six-month span rather than remain the same or worsen, according to a new study from Chicago-based...
By Jason Bramwell, Staff Writer CPAs in New Jersey, New York, and Pennsylvania believe economic conditions in the United States will likely be the same one year from now, and while they predict higher business revenues...
By Jason Bramwell Managers in accounting, finance, and IT are cautiously optimistic about their hiring plans for the fourth quarter of 2013, according to a new hiring outlook survey from staffing firm Brilliant. ...

Upcoming CPE Webinars

Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.