If you're thinking about becoming a consultant, this might not be the best
time. The following article is from today's Forbes magazine:

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Consulting
The New HP Way: World's Cheapest Consultants

Quentin Hardy, 12.05.02, 11:26 AM ET

NEW YORK - Tech giant Hewlett-Packard has seen the future of technology
consulting. It's on the other side of the globe and it's really, really
cheap.

"We're trying to move everything we can offshore," HP Services chief Ann
Livermore told Wall Street analysts at a meeting Wednesday. "We're
aggressively realigning our resources." Short term, that means adding to the
software and services personnel HP (nyse: HPQ - news - people ) already has
in India. Further out, HP expects China to also turn into a major consulting
center.

The plan addresses a trend toward lower-priced consulting that's been hurting
HP. The company's $3.1 billion fourth-quarter services revenue (total
fourth-quarter revenue was just over $18 billion) was off 3% from a year
before. Consulting and integration revenue was the weakest part of services,
down 17% on the year. Livermore, with the blessing of Chief Executive Carly
Fiorina, is betting that HP can both lower its costs and damage industry
leader IBM (nyse: IBM - news - people ) by slashing services prices with
cheaper bodies.

As if the high-priced, oversupplied consulting industry didn't have enough to
worry about. The field has suffered during the past two years' downturn in
technology spending. How bad has it gotten? PricewaterhouseCoopers, which
almost sold its PwC consulting business to HP two years ago for $18 billion,
managed to finally unload its concern to IBM this year for just $3.5 billion.
IBM added the 30,000 consultants to its Global Services Business in an effort
to smother consultancies like EDS (nyse: EDS - news - people ) and Accenture
(nyse: ACU - news - people ). Competition remains fierce, too: As Livermore
pointed out, a laid-off consultant isn't like a factory that gets mothballed
during a recession--he's still out there looking for business.

"The oversupply doesn't go away," she said, "consulting and integration is
going through a tremendous transition, with constant price pressure."

According to Jurgen Rottler, vice president of marketing, strategy and
alliances at HP Services, HP will grow in India, building on the "several
thousand" services people the company already employs there. "In an ideal
world," he said, "you'd migrate as much as you possibly could to India."

Many of HP's Web applications for Microsoft's (nasdaq: MSFT - news - people )
.Net initiative will be written in India, Rottler predicted. HP and Microsoft
recently announced HP would be a prime global integrator for .Net, a "Web
services" move to put more interactive software on the Internet.

HP figures a good high-end programmer in India costs about $20,000 a year,
about a quarter the U.S. cost. And things could get even cheaper. "We see
China gaining on India about three or four years from now," said Rottler. HP
is also developing staff there.

HP stands to have plenty of company developing the Indian services industry,
however. Already, local firms such as the Tata Group (which is traded on the
Bombay Stock Exchange), Infosys (nasdaq: INFY - news - people ) and Satyam
(nyse: SAY - news - people ) have boosted their software and consulting arms.
Microsoft's recent $400 million investment in the country, building on a
strong programming presence already there, is designed to boost education,
business partnerships and software development.

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Wirt Atmar

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