HR consulting industry in doldrums

Seventeen small companies in
the UK HR Consulting industry are in financial difficulty as the lingering
effects of the credit crunch continue to bite hardest at the lower end of the
market.

According to market to a new
report on conditions in the H R Consulting industry, smaller companies have not
had the same facilities to ride out the recession as well as their larger
counterparts.

David Pattison, author of
the Plimsoll Analysis – H R Consulting explains, “While large companies have
relied on their size, brands and better access to cash, smaller companies have
been left high and dry”. He continues, “We have given 17 small companies a
Danger rating. While conditions have improved of late, I fear a high proportion
will fail. Whereas large companies can call on banks and parent companies or
cut out loss making parts of their operations, smaller companies are
increasingly running out of cash”.

Pattison also points out how
small companies are struggling to maintain their market share and being
squeezed out of the market, “71 small companies are selling less than last
year. Clearly they have seen demand for their products dip or worse still, a
new competitor has emerged. With their finances already stretched, they have
little left in their arsenal to fight back”.

So what next for these small
companies? Pattison says, “There are clearly too many small companies chasing
too little market. The inevitable consequence is another round of consolidation
with large competitors buying small companies at a discount. Of the 141
companies with assets of less than £3million, we have identified 57 companies
as being vulnerable to takeover”.

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