Over the past 12 months, consulting rates across Western Europe have stabilised once again after years of constant decline. There is also evidence that service providers are currently trying to push up rates again in order to protect or enhance their profit margins. We expect these attempts to fail, because service providers face huge resistance from end users, who have become far more sophisticated in their underlying sourcing strategies while market conditions have favored them over the past several years.
Most buyer firms continue to expect to negotiate lower rates by applying more stringent vendor management and contracting processes — allowing them to better leverage corporate buying power. Also, with offshore and near shore resources becoming more available even across the traditionally more conservative Continental European markets like France and Germany, strong downward price pressure is clearly set to continue for the foreseeable future.