Management Consulting Industry: An Overview

Consultants as a breed came into existence to be able to provide advice, ideas and even implement them under ambiguous situations or under circumstances that the company may not have seen or been through. The consulting industry in today’s age needs to be a lot more agile and lot more well-informed given the business needs.

Imagine that you are driving a car, you are controlling the steering wheel and you do not have the directions. You would obviously need someone to help you navigate. Quite similar is the scenario in most of the organizations and most people face such difficult situations. People tend to develop a tunnel vision of whatever jobs they work in. That is why management consulting exists­; it provides an opportunity to step back and think afresh.

The role of consulting has evolved over time. Early management consulting started way back in 1925. Since then the business has improved from offering plain vanilla analytics to work hand-in-hand with clients and offering them solutions. Previously, the added value that a consultant used to bring was with their ability to churn huge amounts of data and make logical sense out of it. But things have changed over the last two decades. While problem identification is very well known, Consulting nowadays is about working with the client and implementing solutions. The revenues lie in implementing whatever strategies are planned in the board rooms.

Expectations from Consultants

There are huge expectations of clients from consultants. Out of which there are three to four important ones, and that is what most of the clients usually look for. The first is a better understanding of consumers and customers, which goes far beyond the standard market research of perceptions and the churning numbers. In today’s age of the social media, clients are looking for insight into how the customers are going to behave in near future. The second zone is innovation. In the Indian context of the growing economy, you need to innovate on products and processes. The next phase of growth and development for most Indian consumer goods companies is coming from the rural areas. Companies are focused on stepping into rural (and other) markets faster, cheaper and healthier and they want management consultants to help them get there.

There should be a robust system based on which management consultants could structure themselves to make up to the expectations of clients. Broadly, it could be done through strategy, operations, and technology practices. Simply put, strategy practices are concerned with the “faster” aspect—growth, new product initiatives, top line, launching new lines of businesses, and so on. The operations practices are mainly concerned with cost reduction, while technology enables “better”, which is about fashioning a USP for the brand. Today, technology is enabling and reforming businesses and a case in point is the banking and financial industry where these technological changes have played a disruptive role. For instance, there was a time when banks kept opening new branches to serve customers. Then banks diverted customers to ATMs to save on the expenses of manpower, logistics, and efficiency. Then they realized that ATMs need to be serviced regularly, and there were a lot of cash management, transportation, and logistics issues involved with it, so they diverted them to the Internet. So clients are watching out for technology as an enabler in driving a serious transformation of their businesses.

Considerations for a Consultant

The chief principal of consulting is that it is about respect and trust. As a consultant you might receive an invitation by the client on account of your credentials, that’s when you have to start working on to win the trust of your client so that he could invest in your firm undoubtedly. How you do that is by showing respect for what they have done and why they have faced the query. If you do not understand the question that they are facing, you will never be able to answer them; and don’t ever believe that the question that you hear verbally from them is exactly the question that’s on their mind—that’s the very first fallacy of consulting. Their problem description might be totally wrong! You have to first investigate, to understand what’s going on beneath the surface, the job that they have done so far, and the likelihoods that will take them to the next level. Sometimes what seems to be most beneficial for your consulting organization may not be in client’s favor. But giving the client the advice that will benefit his business is what makes him a repeat customer.

Second, learning is the soul of consulting—it smears across all levels of a consulting organization. Learning, but particularly learning under pressure. It is not easy but if you succeed to thrive under pressure, you will learn a variety of things. For instance, you will learn how different automotive engineering is in a Mahindra in comparison with Tata Motors or Toyota.

The third aspect of consulting is uncertainty. To best understand this aspect, have a look onto the US and European markets over the last five years. The depths of recession will then be very well defined to you. So every year you would find something unexpected and new; you just cannot predict the kind of work you will be doing in future, the kind of client you might be working with or the geography you will be in. There is a lot of dynamic churn in the market and it is getting faster.

Insights on Indian Industry

In the last three years, the Indian environment has started responding to the dynamics; there has been a regulatory churn, people have started to adapt and they constantly try to find the new normal and this process is probably just about to reach the equilibrium. Consider the Indian financial services sector, there is a lot of churn in the banking and insurance companies while they try to define who is in the industry and whether they are going to succeed and make money. Several insurance companies have stepped in and out of the insurance business. Under such circumstances, the success of the banking and insurance industry is achievable only if they understand that their customers can reach out to them with the most effective channel. In this context, consultants in the financial services sector have a lot of opportunities to flourish by counseling the clients about available business opportunities and how to exploit them, the best way to structure market offerings and help clients succeed in their markets.

The financial service industry was the first industry to accept and adopt computers and mainframes when they were invented and financial services businesses have been exploiting IT for a long time. Since the 1960s and 70s, there has been a dramatic decline in the cost of transactions. The focus on cost is persistent and it continues to be for financial services companies worldwide, but they are more evenly balanced between the top line and bottom line. In India, the focus is more on the top line, although numerous companies are investing in various projects for bottom line performance.

India has been a prodigious manufacturing hub and some form of technology has always been there in the core manufacturing business. For a technology consultant, the most significant thing to be considered when you engage with a client is to ensure that you walk the talk. Today’s smart consumers won’t pay a huge fee just for the delivery of a strategy paper. You will also have to make your strategy work in the favor of customer’s organization. That is the reason we observe that the pure play consulting organizations, which were predominantly doing top level strategy, are coming down two notches and considering to work with the client to make things happen, whether it is around operations, strategy, or pure play technology.

As technology has evolved, the role of a technology consultant has also evolved, as has the buying pattern of the clients. A mature customer is probably looking for opportunities to extend the value of what they have spent and assure if they can give them the return on investment (ROI) before they go for another spend. So, one has to make sure of the integration of technology with their business, which is where the ROI is.

Compendiously, a good consultant is one who enables the customer to achieve things by applying the solution, the technology suggested by the consultant. If you are able to make your customer achieve his objectives by the implementation of a specific technology, you would have then played your role as an efficient technology consultant.

There are some unambiguous differences between the mature markets and markets like India. The first key difference is that in a mature market, going to a consultant for an advice on a problem is an obvious choice. In India, while the consulting market has been functioning for the past 25 years, it is still not an obvious port of call. Secondly, overseas clients know what they are getting into and they treat the consultant as an additional resource to help them solve the problem. In India, the expectations from consultants in some cases are very high—it is as if the consultant will come in and work some magic—but this might be evident since the organizations and the consulting businesses are still maturing. Third important aspect is the value for money—most clients will negotiate and research before they decide which consultant they want to go with. So it is not about the partnership, but about getting the best solution for that particular problem.

Concluding Consultants

There is a lot of merit in cross-industry learning, it is probably some kind of basic instinct. In most cases, if you are in a particular business, your knowledge would be confined to that business. The consulting team brings a lot more understanding of what is trending across industries. Also, when you set up teams to solve a clients’ problem, you need to be able to exhibit a certain level of understanding of that particular industry or a business. So you would then deploy people who have already worked across multiple clients within that industry, and therefore, are able to think afresh. Another interlinked aspect is the customer’s insight. Consultants must essentially understand customer preferences and how they are gradually evolving and then figure out what product or process innovations need to be made in order to fulfill their requirements.