While in other industries companies take years to establish their name and brand - IT consulting companies constantly change names and 'reinvent' themselves.
Looks like RichardK covered all the bases with his answer in Reply #2.
It looks to me that the barriers of entry are low and there is still a lot of money to be made.
I disagree.
TRexx wrote: Most consulting companies are partnerships -- 2 or 3 guys got together to sell their services to some huge company - often one where they were employees....
The norm in the mainframe days was just as TRexx said. That is 2-3 guys start a firm. They hire several senior guys and give them job titles of Senior Consultant or Systems Analyst. These guys were system builders and often were required to be salesman for the company. When business picked up the company would hire additional employees to do the actual grunt work (project managers and coders). The owners of the firm could be salesman, techies, or both. Back then the goal was to only do new project work whenever possible because of the high margins. When times got rough these companies either folded or they pimped out their grunt workers to stay in business. These firms didn't go into business with the intention of getting bought out. As TRexx alluded to if they did get bought out it was usually because some competitor from another part of the country was interested in gaining traction within the city or region that they did business in.
Peter Gibbons wrote: Why is then Anderson Consulting ... I mean Accenture still in business?
TRexx wrote: Consulting, especially at that level, is largely about personal relationships.
Bingo! The largest consulting firms get the huge contracts because well who else is there that can do or say they can do the huge jobs? The top managers at these consulting firms typically are in bed with their corporate clients at the executive and board levels. Y2K and the 2001 recession allowed the Indian firms to get their foot in the door. These firms were able to quickly expand their operations because they offered much lower rates than the established "Big Boys". Once the Indian firms started gaining market share then companies, such as, IBM and Accenture began laying off large numbers of their American born workforce (i.e. the technical employees).
Why would any software developer chose ( for the long term ) consulting over creating a software for sale or SaaS venture?
Well, I believe you are talking about recent college grads because most FTE working at large corporations really had no other choice but to work for their new corporate master when they got laid off from their job.
Recent college grads deciding to start their own business is a new phenomenon.
It was during the recession in the early 1990s when large corporations started laying off their IT employees and outsourcing the work to the large consulting firms. When many of the large corporations are no longer hiring entry-level technical workers where are new grads looking to do technical type of work going to find a job? The answer is that many of them got hired by the consulting firms. The problem that recent college grads have run into is that nowadays not even the consulting firms will hire them because they are American. The consulting firms still hire a lot of technical talent but mostly from third world countries. In the USA, they mostly recruit MBA type of grads from the top schools.
