Do you think consulting is a field with a future? In 20 years, will there still be consultants?
Of course! First of all, let’s not forget that the label “consultant” hides very different realities. If you consider a consultant to be an expert who answers companies’ problems, they won’t disappear. As long as companies exist, they will keep calling on outside skills to solve their problems. And consultants have been around for hundreds, even thousands of years…
Thousands of years? But the very concept of a company didn’t even exist?
In Antiquity, masters of rhetoric or sophists were already traveling from one Greek city to the next. They offered their expertise to wealthy citizens in exchange for a fee. The topics they covered were mainly the art of oratory and how to convince an audience. A little later, advisors at the courts of kings also started to appear. They supported the powerful and helped them make the best decisions. Their expertise was recognized and praised by the king, and their opinions quickly became indispensable to the smooth running of the kingdom.
OK, I see, but that’s not the same job as yours at all…
Indeed. That is why it is important to distinguish several categories in the consulting world:
- individual advisors, who can be compared to the Greek sophists
- consulting firms, which grew in importance with the industrial revolution
- IT services and engineering companies, which were born with the development of computing
So, are you part of a consulting firm? Or of an IT services company?
The boundaries between these two categories are more and more blurred. For example, we can distinguish 3 subcategories within consulting firms:
- strategy consulting firms, which mostly interact with companies’ executive management
- management consulting firms, which offer a very broad range of services around transformation and operational improvement
- specialized firms, which specialize in one area of expertise or one industry
The challenge for many of these firms is to be able to meet their clients’ needs end to end, from strategy to execution. And that can go as far as developing IT solutions. They are then called digital services companies.
I would say that at Alenia, I am rather in the management consulting part of a digital services company, because we have a strong specialization in IT issues.
Yes, I remember,we talked about it here. So, are some categories of consulting firms more at risk of disappearing than others?
As you have seen, “consulting” covers very different activities. The main risks consulting firms face are:
- internationalization, with traditional firms being put in competition with low-cost players from emerging countries
- uberization, with the creation of platforms that directly connect freelancers and client companies
- obsolescence, with the emergence of other innovative players from academia or startups
But of course! Why go through a French consulting firm when I can get the same quality of service for less from India? This logic worked for textiles and manufacturing, why wouldn’t it be the same for consulting?
Indeed, it’s a major risk, but it doesn’t hit all categories of consulting firms in the same way. To understand it better, we need to go back to the service consultants provide, the reason why people call on them.
I’m listening
Depending on the consulting firm’s positioning, the success of a consulting engagement will be measured either by the quality of the deliverable handed over to the client, or by the changes that will have been made at the client’s. Let me explain:
For a strategy consulting firm, the client mainly expects an answer to a strategic issue, or in-depth analyses of a company in a buying or selling process. These activities therefore require a highly developed back office to analyze colossal volumes of data and present them in a synthetic way. A strategy firm could therefore keep only a sales and client relationship activity in France and offshore almost all of its resources to the other side of the world. That would sound the death knell for strategy consultants as we know them.
I knew it, strategy consulting is over!
No, you’re going too fast. It would only mean that strategy consultants could be offshored. Today, they spend hours running detailed analyses and building presentations with, in the end, rather few direct interactions with the client. By forcing consultants to stay home, the COVID crisis has greatly helped show that it was possible to “consume” consulting remotely.
But whether consultants stay in France or are offshored to India, clients will always have strategic issues to deal with. And the logic is quite similar for digital services companies. A large share of the “workforce” can be offshored to countries where wages are lower, to reduce the cost of the services. But the need for digital services won’t disappear. There will always be innovative companies, and other, less mature companies that will have to catch up and will need to call on outside expertise.
Well, come on, if we follow your reasoning, there won’t be a single consultant left in France…
This reasoning only holds for strategy consulting firms and digital services companies. For management consulting, I would be more nuanced.
Clients don’t expect management consulting firms to provide them with nice documents or applications. They expect an improvement in the way they operate. If we go back to the analogy of the doctor or the physical therapist, you don’t only expect them to give you the best medicine at the best price. You want your back to stop hurting, or more generally, to be cured. The quality of a physical therapist doesn’t depend on the treatments they give you, but on their impact on your health.
And so? What’s the link with internationalization?
Management consulting requires a strong proximity with the client, which is very hard to offshore. During a transformation engagement, the consulting firm will ask the client to make significant efforts and to give up some of its working habits. To get there, the consultant must show empathy and put themselves in the client’s shoes to understand them. They must create a space of trust where their recommendations can be heard, understood and accepted. This client intimacy is harder to establish remotely, all the more so when you add a language or cultural barrier.
OK, I see. Even if management consulting firms help companies, fundamentally they support the men and women who work there. And what about the other risks you mentioned? Is consulting going to get uberized by platforms such asMalt?
I don’t think so. These platforms help companies find quality freelancers and answer a real “sourcing” problem. On the other hand, this model is less suited to companies’ need to carry out global transformations, or to follow a standardized approach. With 5 freelancers, even very good ones, the company risks ending up with 5 sets of recommendations that will reflect the preferences of each of the 5 consultants. Moreover, these companies generally want to build a relationship of trust over time, which is complicated with a group of freelancers.
That sounds a lot like what hotels or taxi companies could have said 20 years ago…
Indeed, but to me there is one major difference: a consulting firm owns almost no assets, it is by nature extremely adaptable and flexible. More than in any other industry, the value of a consulting firm lies above all in its employees. Brand aside, a consulting firm generally owns no patents, no complex machinery, no certification, no closely guarded technology. Everything rests on its consultants, their address books, their expertise and their willingness to work. That is actually why acquisitions of consulting firms are so difficult, and why all it takes is one experienced manager to create a new one.
There are therefore almost no barriers to entry for new players; it is a constantly evolving industry driven by fierce competition. It is the exact opposite of taxis, booksellers, lawyers or banks.
So in your view, consulting firms are “uber-proof” and will never become obsolete?
Consulting firms, small and large alike, are already under strong pressure today to transform and become more efficient. In this hyper-competitive environment, dozens of firms are born and die every year. Consulting firms won’t get uberized overnight by an outside player, because they are already devouring each other every day!
And uberizing consultants would amount to making the solving of complex problems obsolete. I can only see a “super Artificial Intelligence” pulling off that challenge, and when that day comes, finding work for management consultants will be the least of our worries!
