Deloitte Throws Salt On Web Integrators’ Wounds

While a number of Web integrators are still licking their wounds in the wake of declining revenue growth this quarter, Deloitte Consulting has taken the first public shot in what may become the new talent war between pure-play Internet services firms and traditional consulting giants. Deloitte has taken out a full page ad in the Wall Street Journal to strike a high-profile jab at some of its high-flying Web integrator competitors, many of whom are finding their revenue growth sagging in the face of a quickly changing Internet services marketplace.

The full-page ad, which ran in today's Journal, was billed as "An Open Letter To All Employees of Pure Play Internet Consulting Firms." The letter, which was signed by Deloitte CEO Douglas McCracken, spoke about the "precipitous decline in the share price of Internet consulting firm stocks."

In the last two weeks, companies like iXL, Viant and Xpedior have all announced that third quarter revenue will be lower than anticipated, primarily because of the decline in dot-com business and the lengthening of sales cycles for Global 1000 e-business projects.

Conversely, the letter states that Deloitte has become the fourth-largest consulting firm in the world because of its "strength, stability and innovation." According to McCracken's letter, Deloitte Consulting has completed almost 1,000 e-business engagements and has had 149 consecutive quarters of profitability.

"While the stock market gyrates, we have concentrated our efforts on translating the hype of e-business into the reality of sustainable business results."

The letter goes on to target the employee stock option plans, which were once a major draw for top pure-play Web services firms. "If you are tired of watching the value of your stock options rise and fall like a roller coaster, then think about joining an innovative firm with a rock-solid foundation. Think about Deloitte Consulting,we're in it for the long haul."

According to Stephen Sprinkle, Deloitte Consulting's global director for strategy innovation and eminence, the firm has been watching the Web services space closely, waiting for revenue downturns that had been predicted by some analysts.

"We had been wondering when a change will come in the e-business consulting market, because we weren't convinced the hype or growth characteristics of e-business consultants was likely to last for a long time," says Sprinkle about the decision to place the ad. "The idea is that we have a lot to offer good consultants, and we represent a long-term play for their careers. We have a history of running our practice through many generations of technology and management disciplines. That's good for a person's career."

Sprinkle says the biggest challenges for today's Web pure-plays are their reliance on B2C work, the market's shift to more complex B2B work and the emerging wireless technology.

"The B2C side of the market is maturing and there is already a shakeout under way," says Sprinkle. "The B2B side tends to use technologies and strategies that play to the strengths of a firm like ours. And with what's happening wireless, we are seeing that it's not as simple as PC-based Internet software construction. You have to have pretty strong telecommunications consulting skills, that's something we have."