Some time, not too long ago—in 1999—a relatively new breed of companies took NASDAQ by storm. Scient, Viant, Razorfish, Proxicom, iXL… some of these companies were seen as the greatest business ideas on earth incarnate. Not really the Silicon Valley techy types, these companies talked of creating a new value proposition for which there certainly was a need. They promised to help companies—new and old—that wanted to do business on the net by offering them solutions that incorporated a broader "digital strategy", creative designs and the technical expertise needed to build the "e-business" system. And in some cases, they did it quite successfully. That was a great relief for clients who were looking for a way out of managing these multiple consultant/integrator relationships with strategic consultants, big SIs and advertising/marketing consulting firms. These "pure-play" services companies focused on just end-to-end solutions for doing business on the net. The services came to be known as Internet Professional Services (IPS), Digital Professional Services (DPS) or simply e-biz consulting.Now, a few months later, there is a totally different story to be told about them.

Let’s begin with the all-reflecting NASDAQ values. At the time of writing this story (15 February 2001), Scient was trading at $2.85, Viant at $3.5, Razorfish at $1.25, Proxicom at $6.93, and iXL at $1.78. And all of them were moving downward.

So, what happened?

Quite a few things, not all of which are the fault of these companies.

One, the biggest culprit among the external factors was, of course, the dot-com crash. Any company that had something to do with technology, especially the Internet, got hit. How could the companies who were actually helping build a business whose model was being questioned, have survived?

Two, by this time, a lot of technical and system integration companies had entered. And they entered the space with different strategies. Sapient, a small company into client-server solutions, totally repositioned itself, quite successfully, as an e-biz consultant, and what is more, as a pure-play company. Also tried, though not with the same amount of success, was Cambridge Technology Partners. And of course, big SIs like Andersen, PwC, KPMG and EDS seriously added e-biz consulting to their portfolio. So did the price-competitive services companies from India, like Infosys, Wipro, HCL Technologies, and even the likes of TCS. And all of them were competing for a limited market, which was stopping to see if it was all right to move ahead.

Three, the market had put more than its due share of confidence on these companies. It was assumed that soon a few of them would emerge as the big five of the new economy consulting. So they were valued that way. Though many still do not doubt the basics of this assumption, the results of these companies were not meeting the expectations and the market does not have much patience.

And of course, there are a few mistakes that these companies committed.

One, they turned down projects from big traditional companies to take dot-com projects, as the former were supposed to be of longer life cycle. And also dot-coms paid better, thanks to the "disposable" VC money. On top of that, these companies accepted equity in lieu of cash as their fees from dot-coms, which at that time were very highly valued.

Two, there was a rush for signing clients, resulting in cases, where it was not possible to execute those contracts because of resource and time crunch. In fact, today there are cases where a company like Razorfish has been taken to court by a client, who has accused it of doing bad design. A Cysive has been stopped payment because of poor quality of work. And there are just too many stories like that.