Claims that the consultancy market is improving have been dismissed by analysts, who argue that IT directors still have the upper hand in negotiating prices.
Figures from the Management Consultancies Association (MCA) trade group suggest that spending on consultants in 2002 grew by 3.3 per cent from the previous year.
Much of this increase was driven by IT, especially work on developing existing systems, the MCA said.
For consecutive quarters consultants have been reporting increased activity, said Sarah Taylor, deputy director of the MCA. "This could mark the beginning of the end of decline," she said.
But analyst firm Ovum Holway has disputed this optimistic assessment of market conditions.
"To be honest, this looks like trying to put a cheery face on a bad news story," said Anthony Miller, chief analyst at Ovum Holway.
Demand for consulting services remains "very subdued" and pressure on fees is likely to increase over coming months, giving buyers the upper hand in negotiating contracts, he added.
Figures released last week by UK IT services organisation LogicaCMG support Miller's assessment. In the six months to the end of December 2002, revenues fell seven per cent from the previous six months.
But prices for IT services were beginning to show signs of "greater stability" in the UK, said Martin Read, LogicaCMG group chief executive.
LogicaCMG's results are indicative of the general trend in the IT market, which currently is to hold back on spending, said Miller.
Businesses continue to invest in outsourcing, but this tended to be as part of a cost-cutting programme, he added.
Gap Gemini Ernst & Young has also reported that consulting activity is down. Its UK revenues fell by 13 per cent in 2002 compared to 2001, it reported last month.
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