Oil field services companies slogging through the worst downturn in decades can no longer rely on their traditional oil bust playbook of cutting costs, laying off people and offering deep discounts.
Instead, the industry will have to reshape the way it does business to meet the evolving needs of oil companies clamoring for cheaper and more efficient tools and services, rather than the expensive, custom-fit solutions that the services providers had been pursuing before prices collapsed, according to a new analysis by management consulting firm Bain & Co.
“It’s a pivotal moment,” said Ethan Phillips, a partner at Bain & Co. who co-authored the report examining the services industry’s response to the oil slump. “The industry that comes back is going to look quite different than it did a few years ago. The services and equipment providers that use this opportunity to remake their cost base, rethink how they interact with customers, and reorient their portfolios to the part of the industry that’s going to see the biggest activity bounce-back, those are the ones that are going to win.”