I’ve had quite some SMS exchanges with a friend last week on the topic “What’s the use of a consultant?”.  I once heard someone saying “Consultants are people who borrows your watch, then tell you the time”.  Especially in an Asian environment, the consulting industry have not gain as much acceptance as they are in the West (or at least my view of how consulting works in the West based on some “good write-ups”).  Having been in the consulting industry before, I often see many organizations use consultants as nothing more than an outsourced vendor or contractor.

So why do organizations use consultants?  Or why should organizations use consultants?  These are questions that often pops up; and most often asked by the very successful business leaders who made it without much help of consultants.

In fact, if we look into management consulting, it’s really nothing new.  Arthur D. Little was the first management consulting firm founded in 1886, followed by Booz Allen Hamilton in 1914.  The early days of Management Consulting came from the universities and academics, and are often research based.  Post WWII however, the big names of today emerged - Boston Consulting Group & McKinsey & Co.  These are the big names once the dream of many MBA graduates (was once my dream to be there too!)

The industry had a sudden boom and in came Accenture, Deloitte, Cap Gemini, IBM GBS (formerly BCS where I had a stint in).  We see a suddenly surge in supply of consultants.  What’s interesting about the new consulting industry is the fact that:

• High number of fresh graduates are hired every year into the consulting companies
• They usually a repackaged division of a Technology or Accounting/Auditing firm
• A large part of the business includes outsourcing and implementation.

Now what’s the difference in these consulting firms (or industry today) compared to those in the past:

• Back in 1800s - 1900s, there were not many many university graduates as there are today, thus the consulting industry provides “knowledge-base”.  Today, most organizations are filled with graduates, thus the “consultants” aren’t really that “knowledgeable” if compared.
• When the number is lesser, they are highly prized.  Now that there are so many “consultants”, we really can’t tell who’s the better.
• When the demand is so huge, many firms have been hiring those who are not even at the top of their class.
• Finally, when clients don’t see additional value in the form of “expert knowledge”, that’s when they ask for more “labour”.

So now we see how it has evolved?  While the world moved from manufacturing to knowledge economy, the consulting industry was forced back into the production economy.  And here are some reasons why some companies go to consulting firms nowadays:

• It’s nicer to have an outsider to present to the management (more credibility).
• Used as a flexible workforce (at least they don’t need to keep the headcount when the project is over).
• Do the routine work that does not have a career progression (that explains why “consulting firms” hire large number of graduates).  Career progression matter will be left to the consulting firms to manage.
• Speedier implementation if consultants who has implemented in another organization before as a ready solution (ok, at least this is better).

The fact still remains that most organizations today would rather do the strategic planning by themselves rather than relying on an external party.  But here are few tips on why consultants are still important in today’s corporate world:

• Refering to the final point above, why reinvent the wheels when you’ve got a ready solution?
• The consultant may not be the smartest on earth, but he/she provides an additional point of view.
• An internal person is often too familiar with the current operations, an external consultant sees the picture more objectively.
• Even when the consultant that comes up to you is a young fresh graduate, the knowledge he/she brought to you may have came from the knowledge database of the consulting firm (so it’s still a wealth of knowledge).

And for those out there who’d like to become a consultant one day, here are some very important advantage:

• A wealth of knowledge in a domain area (something of which many consultants may not have nowadays)
• Reads a lot.  Knowledge in areas which is not in your area of expertise is good, especially for innovation.
• Ability to learn and digest very fast.  The difference between reading a book and understanding it from the consultant would be the speed in absorbing it, so consultants will need to understand the psychology of his/her client in understanding the subject matter.
• Ability to analyse the many views.  All views can be obtained from the Internet, the key advantage is the ability to quickly talk about the pros and cons in each of them.

Just some thinking aloud, anyone else has something to share?  Your experience as a consultant or engaging a consultant?

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Tags: accenture, bcg, consultants, consulting, Discussion, ibm, management, mckinsey

This entry was posted by Clayton J.C Tan on Monday, April 5th, 2010 at 12:04 pm and is filed under Business Strategies, Economy, Leadership & Management. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.