This post is going to be one comprehensive update on the current state of affairs of the consulting industry.
The dream of every MBA aspirant would be to wear business formals and rub shoulders with CXOs, draw hefty pay checks, play golf and roam in big cars after graduating. This is the very reason why management consulting jobs are the most sought jobs in all B-schools, as the profiles offer lucrative pay-checks and lustrous work styles.
I once took a dig at the consultant profiles in one my blog posts, of course on a lighter note. Do read.
A survey, conducted by InsideIIM.com, on career choices and preferred companies of MBA aspirants. Consulting was clearly the most sought out one and Mck rules.
Read this Consulting-Primer by Shyam which gives a fair idea about what? why? how? where? of consulting.
Last 2 decades witnessed drastic changes in the way businesses are run.
An excerpt from Business Line -
Last two decades mark a critical turning point — a radical shift even — from Nehruvian socialism to Manmoha- nomics, from mixed economy to market economy, triggering unprecedented changes in nearly every aspect of life
With the sea changes in environment, the consulting industry game plan has also changed and is not the same as it was in 90s; the pitch is totally different now.
• Fastest-growing markets
• Difficult economy
• Tougher clients
• Buying cycles are getting longer
• Competition is tougher
• Project mandates are forcing consultants to raise the game
Smarter clients are now demanding more. Earlier a firm's name would be enough to get projects; now partners are becoming more important in the equation.
Consulting Industry in India - Pyramid
The Top 5 Consulting Firms Profiles
Gone are the times when the promoters and CEOs wanted reports or ideas or portfolio analysis; Clients increasingly want the consulting firm's skin in the game too.
Now they want
• On-the ground changes;
• Streamlining distribution,
• Better go-to-market strategies
• Operational excellence and
• Efficient supply chain management.
In fact, pure strategy kind of projects would add up to only 10% to 15% of the high-value consulting market. Clients want consultants to get their hands dirty; not just give them a study.
Changed Game Plan
Businesses are not assigning bulk deals anymore; they are matching the areas with respect to expertise of the consultants. Companies are also becoming more aware of the differentiation between firms.
For strategy or portfolio kind of work - McKinsey or BCG
PE firms choose Bain for strategic diligence
Supply chain and operational kind of work - AT Kearney
Sales distribution and reorganisation - Big Fours
In fact, the Big Four's consulting arms and Accenture have made big inroads in the mid- and low-value part of consulting. Firms are getting more traction despite the on-going economic slowdown. But the nature of growth is changing. Over half of all assignments in the last 4-5 years have come from newer clients like family-owned mid-caps, private equity and private equity-owned companies, infrastructure projects, public sector (excluding banks), and state governments.
Clients now don't get taken in by the 'messenger' but go by the message.
The payment is not just linked to deliverables but to the results. They want full paisa vasool for the money spent, at times 15-20 times more returns. There is more contingency and variable pay now
Typical Consulting Project
Big Four vs the Top Consultants
Big Four’s offering
• Right strategy,
• Right course of action,
• Set up the organisation structure,
• Proper compensation structure
• Set up Information systems,
• Merger & Acquisitions
Also, given the wider range of services that the accounting firms can offer at much more reasonable fees, their value proposition is compelling.
Strategy of Big Fours
-> First, they offer a wider range of services, from IT implementation to shared services to risk management to even forensic services.
-> Second, they work with middle management as most of the work is heavily execution led.
-> Third, they are much more affordable with rates up to 30-50% lower than the big boys of consulting.