Overview, market size, growth trends, news resources
Oscar Wilde was known to say that he had only one use for advice: to pass it on to someone else. We have no way of knowing whether he meant tips from his consulting editors.
Seriously, though, well-informed guidance is a precious commodity for lesser mortals of present day. Business people and organisations around the world now depend on the wise counsel of expert consultants for their survival and growth.
Corporations don’t mind paying between $200 and $500 an hour for the deep insights that these experienced, knowledgeable, and innovative professionals offer.
But consulting as a profession or formal business didn’t formally come into being until the late nineteenth century.
True, the biblical kings had prophets and the Greeks had their oracles; Mauryan Emperor Chandragupta had Chanakya, and Akbar had Birbal. Even the mafia had their consigliere. But consulting took institutional shape only around the Industrial Revolution.
The first recognised consulting firm was established in 1890 by Arthur D. Little, and it specialised in technology. In 1898, Coopers and Lybrand (today’s PricewaterhouseCoopers) was set up for accounting consultancy. In 1914, Booz Allen Hamilton became the first management consultancy to engage with both the government and the industry.
In the same year, 1914, Arthur A. Anderson founded an accounting practice that onced employed the largest number of consultants. The Enron scandal pulled it down. But its consulting division (now Accenture) was hived off before the implosion happened.
James O. McKinsey established McKinsey and Company, the first exclusive management and strategy consultancy, in 1926. After the death of McKinsey in 1937 at the age of 48, his associate, Marvin Bower, ran the firm. Bower boosted the professional status of consultants by insisting on their using appropriate business language; it was he who started the practice of hiring business-school graduates in place of established management consultants.
Consulting firms played a significant role during the Great Depression in the 1930s, when companies sought their wisdom to put their troubles behind. Good times came again for consultants during the end of World War II, when they were gratefully remembered for their wartime assistance to the government.
After Cold War ended, when businesses began to look for opportunities overseas, they sought the help of consulting firms to do well in the new market. The strategies the consulting firms developed made their way to the curriculum of top business schools around the world. The new MBAs paid them back when they started their careers and rose up the hierarchy: they brought in more consultants.
However, consulting firms have had to face two major setbacks since 2000—the dotcom crash (2000-02), when high-tech and dotcom companies were forced to let them go, and the credit crisis (2009-11), when most Western governments, heavily under debt from trying to fund financial companies out of their troubles, were forced to cut down on their dependence on consultants.
They have recovered, but not fully. The growth rate in the US is yet to pick up, the Arab countries are still only recovering from the drop in oil prices, and the Chinese story has taken a sombre turn. However, Indonesia, Singapore, Taiwan, and South Korea seem to be doing well enough to contract consultants for many projects.
Despite its predicaments, the consulting industry, in 2014, recorded revenues of nearly $415 billion worldwide, from all types of consulting, including management and strategy consulting, information technology, other technical and scientific fields, and human resources. Of this, the US accounted for about $191 billion.
Accounting services brought in an additional $152 billion in that country in the same year. According to Plunkett Research, global revenues from consulting will soon be around $449 billion. India’s consulting and outsourcing industry, put together, had revenues of $89 billion in 2014.
Today, many of the old-warrior consulting firms still thrive, mainly providing management and strategy advice, along with new and smart groups and independent consultants, providing clear road maps for general business, information technology, accounting, marketing, and a host of other functions. But they face tougher and more demanding clients, who insist on proof of their efficacy in their operations and bottom lines.
Consultants have risen to the challenge. Instead of leaving town after handing in particularly bulky reports, they are staying on and implementing their own recommendations. Not only that: they are now prepared to become stakeholders in the businesses they are confident they have improved.
Categories of consulting firms
Academics and industry experts categorise the best consulting companies and consultants as:
1. The industry elite
The industry elite counsel the top management of mega corporations on business strategy, and include Arthur D. Little, A. T. Kearney; Bain and Co, Booz-Allen and Hamilton, the Boston Consulting Group, Mercer Management Consulting, and Monitor and Co.
2. The Big Four
The Big Four provide strategy advice too, but they also focus on implementation, particularly in the case of their IT clients. This group consists of Deloitte Consulting, Ernst and Young, KPMG, and Pricewaterhouse Coopers.
3. Boutique firms
Boutique firms specialise in particular fields of consultancy. Examples are Oliver Wyman (financial services), Gartner (research), MarketBridge (sales), and APM (healthcare).
4. IT specialists
IT specialists provide planning and implement projects related to computer systems, telecommunications, and the Internet. They include IBM, Accenture, and the Big Four.
5. Human resource advisers
HR advisers offer solutions for employee management, compensation, and pension programmes. Hewitt Associates, Mercer, the Hay Group, and Towers Perrin are among the top firms.
Independents are experienced business management experts who are hired for their special functional talent. Instead of hanging up their boots, they hang up their own shingles, very profitably. After a fulfilling career, many former executives use their resources to help out corporations and smaller companies. They comprise about 45 percent of all consultants, and typically work from their own small offices or even a spare room at home.
Types of Consulting Services
Consultants walk into offices and find new ways of doing things. They provide insights on how to increase profits and how to reduce costs and debts, how to improve work flow and how to bring in change where necessary, how to use technology to improve operations and how to get the most out of their employees through training and benefits.
Some of the services that consultant companies provide have found mention in the section above on categories of firms. But here’s a list of services that are most sought after:
Management/strategy: Management consultants suggest and implement methods to improve the strategies, operation efficiency, and policies of their clients.
Human resources: HR consultants help companies get the best from their workforce and help ensure that employee benefits bring the results that management desires.
Technology: Technology consultants facilitate the integration of the latest technologies with their clients’ businesses, lending a hand in the installation, maintenance, and management of tech tools.
Marketing: Companies call in marketing consultancies to help promote and sell their products to their target customers using state-of-the-art strategies.
Legal/accounting: Legal and accounting consultants well-versed in company and tax laws are sought after by corporations to ensure compliance and to prepare their documents.
Media/public relations: Businesses are keen to present their best image to customers and clients and use the services of media consultants. The advent of social media has made image management a sensitive issue for which the knowledge and experience of media experts are required.
Financial/investment: Investment consultants are aware of developments in the financial world and can guide individuals and organisations in making good decisions on where to place their funds.
Consultants are also active in the fields of publishing, designing, public policy, and careers, to name a few.
Consulting Industry in India
At the end of the Cold War, American and other Western corporations employed consultants from Asian nations, including India, before venturing to explore these new markets.
In India, after the liberalisation of the economy, consultants were hired by Indian companies that wanted to expand their operations abroad. Now, Indian consultants, particularly those in the IT world, are most sought after, not only in India but also by world powers, for developing their global businesses.
Today, TCS, Infosys, Wipro have offices all over the world, and they give US and European consultancies a run for their money. Among other major IT consulting and outsourcing companies in India are Tech Mahindra, HCL Technologies, Genpact, Mphasis, and Mindtree.
The Indian consulting story began in the 1990s when C. K. Birla requested McKinsey to devise a turnaround project for Hindustan Motors. Soon, McKinsey opened an office in Delhi, employing about 100 consultants.
According to an estimate, there are now over 10,000 big and small consulting firms in India, 6,000 of them in the four metros of Delhi, Mumbai, Chennai, and Kolkata.
According to the Associated Chambers of Commerce and Industry, the Indian consulting industry is expected to record revenues of Rs. 27,000 crore by 2020. One estimate says that between 500 and 600 high-value consulting contracts, worth $250 million to $300 million, are awarded every year by Indian companies, including 30 or 40 projects worth over $2 million each.
As in many other sectors, low cost was the first major initial advantage of Indian consulting companies and consultants. But their major clients and their partners abroad have found that Indian consultants have other advantages, such as professionalism, industriousness, willingness to learn, and adaptability to technology. Their competitors have started to view them as worthy equals.
However, they suffer from shortcomings, too. Among them are poor brand equity, experience in foreign markets, ability to maintain quality, and low level of R&D. But they can overcome these difficulties and emerge more powerful in the global scenario if they adopt the best practices in the industry and improve their knowledge resources and data warehousing.
A survey some time ago found that over 35 percent of graduates from the top B-schools in the US preferred to join a major consulting company. The reason was not far to seek: the starting salary package usually offered was nearly $135,000, excluding a signing bonus of $25,000.
And the perks? Responsibility early in career, highly talented colleagues, learning opportunities, and travel to big cities. A study carried out by TCS recorded that 80 percent of graduates from the top business schools in India wanted to join consulting; a majority of them eyed global opportunities.
What does it take to jump on this career bandwagon? An MBA from a top business school in the country or a good postgraduate degree in economics, science, technology, or business is mandatory. Industry experience will take you very far. But if you want a look-in from McKinsey, Boston, or Booz, you will probably have to come from an IIT.
But are you fit for the job? The first thing is that you should love PowerPoint: excellent presentation is vital. You should also be a team player, a problem solver, and a researcher by nature. The long hours and the travel that keep you away from home may sometimes make you feel you are living a dog’s life, but most of the time the gains will far exceed the pains.
One major source of satisfaction, at least later in your career, will be that you can sit down with and counsel C-level executives. You will also be proud to see the impact of your suggestions on an entire company and its people. And you will probably find that most of them appreciate advice, unlike the good Irishman mentioned at the start.
Online resources on consulting news
The websites of some of the consulting firms referred to here are good banks of information. Also check out their blogs and those of smaller consulting firms and consultants (try searching for “top consulting blogs”). Here are details of a few top resources on consulting.
By - https://www.careerizma.com/industries/consulting/