charlesblazer (99.70)

"The Bobs" - Consulting & Staffing firms

March 24, 2008 – Comments (5) | RELATED TICKERS: SLF , EXPO , RECN

In honor of Bear Stearns, last week my Rating dropped in most spectacular "Bonzai!!!!" fashion from 99 to 15, and it's still dropping today.  (feel free to point and laugh at my awesome score graph)  I figure now's a good time to make a speculative play in an overlooked sector.  What do I have to lose, right?  There isn't much buzz on CAPS about Consulting & Staffing firms, but I have a hunch...  Please share your thoughts.

Over the weekend, I scoured the Management Services tag here on CAPS and made some picks.  Here are my thoughts:

Regardless of whether we've hit a market bottom or not, we are in pain and struggling to recover.  As Mike Huckabee can tell you, the road to good health begins by cutting the fat.  That means layoffs, which we are already seeing (though not in all sectors).  This brings to mind "the Bobs" from one of my favorite movies of all time... Office Space.

Bob Porter: "We're gonna be getting rid of these people here... First, Mr. Samir Naga... Naga... Naga... Not gonna work here anymore, anyway."

Although few consultants are as funny as John C. McGinley, I would think they would be in high demand this year.  Cutting the fat doesn't just mean layoffs -- it also means increasing production efficiency, supply chain efficiency, I.T. efficiency, H.R. efficiency and any other efficiency you can think of.

So I would think that consulting firms specializing in efficiency will increasingly be called upon to work their magic this year.  Their business should benefit.

And then there are all those people in suits, with advanced degrees, who will be hitting the streets looking for work, many of whom are strapped to jumbo mortgages in (formerly) hot markets.  They will need work fast, and despite the broader economic downtrend, I suspect that people with good credentials will still be in demand.  Speaking from personal experience, I get calls and emails from staffing agencies several times a week, offering me various open positions -- even though I'm already employed.  Also, my wife (a medical professional) was recently able to change jobs, through a staffing company, with only one week of downtime.  The jobs are out there for people with the right advanced degrees.

So I would think that staffing firms specializing in advanced professional placement will benefit from both sides of a strong supply and demand for talent this year.

Playing this hunch, I did a rough cut of companies from the Management Services tag.  EXPO looks especially nice.  I like their model (technical / engineering consulting) and they've shown steady, unexciting growth even during the recent downturn.  You can see my other choices among my picks on 03/24.  We'll see if this play works out.

Please share your thoughts.