Gartner Consulting to close in Asia Pacific

There’s a strong rumour that Gartner will shut down its consulting division in Asia Pacific and layoff staff. It will probably be announced later this week. This will not include Japan, which is managed autonomously. Staff in Hong Kong and Australia will be hardest hit.

At one time Gartner consulting had more than 50 staff in the region (excluding Japan). As part if the firm’s focus on serving firms that have revenue over $1b, Gartner has slowly been winding consulting down (not replacing staff who left) . Now the number of staff directly affected may be about 30.

This will have some negative implications for their reputation in the Asia Pacific and hurt their entire business in the region, not just consulting. However, the negative impact will primarily be in a sector that Gartner is turning away from: the firm hopes to benefit from the increased focus on its target customer segments.

That said, I don’t know any other IT company that is actually withdrawing from a part of the world with the fastest growing IT markets and two-thirds of the world’s population.

This is a not tactical retreat, caused by low demand for Gartner-style consulting. I don’t think so, at least. If you asked Gartner sales management in countries like India they’d tell you that there is huge untapped demand for consulting services. Management’s strategic direction is behind this change.

To some, this confirms the ineptitude of Gartner and reflects long history of low investment in Asia Pacific. However, it reflects Gartner’s laser focus on serving major clients and established markets. That strategy has worked well to raise the stock price. There’s a real cost to that choice: it is at the expense of long term business growth opportunities. However, the up-side for Gartner seems to exceed the down-side.

Gartner’s stepping back in the region creates an opportunity for other firms, those that are more able to adapt a different type of business model or approach, to succeed in the region. The key players will be the 30 people Gartner lay off: will they form one or more new firms, work with regional players (IDEAS, Springboard, Strat-etech, XMG…), or convince one of the global firms to be more flexible? Either way, they will also be able to benefit from Gartner’s choice.

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