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National and Global, United States

Thursday, September 24, 2009

What the 'hey' is Happening to Management Consultancies?



Across the board, it appears that most, if not all, management consulting firms, are taking a significant 'hit' into the economic doldrums. The big firms are getting hurt the most. They have significant monthly overhead, and clients just are not making the financial commitment that they once did. It appears to be mostly focused on the public sector consultancies, since the 'beltway bandits' with the federal cash flowing like water, seemed to be weathering the storm.

Here's an example from public records of MCG consultants based in London. This is probably typical:


"In line with many other consultancy and professional service businesses, Management Consulting Group PLC has not been immune to the effects of the turbulent economic environment within which it has been operating. Many client companies have cut back or delayed their discretionary expenditure budgets and, in some sectors and geographies, business has been hard to come by...

Several programmes have been undertaken in the first half of 2009, with the result that the number employed worldwide in the Group is around 1,850 at the end of June 2009, down about 300 or 14% from the number employed at the end of 2008 and about 500or 21% from twelve months ago. The majority of the reduction has occurred in the US."

Can you imagine? 500 employees were fired in 12 months. 21% of the entire professional staff. And I think that's typical. Recall what I wrote in another post:
"You cannot shrink your way to greatness".

How do you overcome this 'fall from grace' of the management consulting vertical?

One way is for the consultant firms themselves to 'outsource' the strategic marketing and business developing to firms that do that exclusively. They save overhead and usually can secure a firm that will limit their net cash outflow for such services. On the other hand, management consulting firms historically, never really did a good job of marketing themselves (branding), or strategically coordinating new business development. Thus, this might be a turning point in the way they conduct their business, and look internally at themselves. Just a thought, but today the consultants may need to be consulted. Funny how things go-round.

2 comments:

  1. "You cannot shrink your way to greatness" I love that line and plan to use it. What bothers me is Wall Street see a frim close 100 stores and says let's drive that stock price up. When they have done nothing to or for the brand! The more importanlty have done nothing for the consumer!

    ReplyDelete
  2. welcome to capitalism, in its worst form!

    ReplyDelete

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