The Pros And Cons Of Management Consulting

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In the past three decades, several industries have seen disruption. The pattern of industries such as Retail, Publishing and Photography have followed a very similar pattern in the past. New competitors with new business models arrive in the marketplace; Incumbents either ignore the new players or diversify into other products and services; A disrupter whose product was once barely competitive gains a level of acceptance in the marketplace; The position of veteran players is threatened causing a “Disruption” owing to a new business model. The management consulting industry is looking at similar signs of such a pattern with competitors with non-traditional business models are entering the market and gaining acceptance. Moreover, at traditional…show more content…
It involves sending outsiders into organizations for a finite time. These individuals then provide recommendations and solutions for some of the most difficult problems that confront the clients of the consulting firms. Consulting has remained immune for such a long time attributing to two factors- Opacity and Agility. Compared to manufacturing based firms, consulting is highly opaque. Opacity means that it is highly difficult for clients to judge the consulting-firm’s performance in advance. Consultancies are hired because of the specialized expertise and knowledge they have and the capabilities the client firms lack. In fact, it is even harder to determine the performance after the project is completed because many external factors influence the outcome of the project such as quality of execution, management transition and time. Moreover, the consulting-forms are highly agile owing to primary assets being only human capital and minimal fixed investments. Hence, the firms are not handicapped by resource allocation…show more content…
The growing sophistication of client needs has lead to disaggregation of consulting services, reducing the dependence on solution-shop providers. Companies are becoming increasingly smart in assessing the jobs they need to hire external help for. They assign the jobs to the firm whose expertize and capabilities are most appropriate to handle those jobs. As the client needs evolve, the consulting industry is going through modularization. Companies are looking to extract the maximum value for their money. Therefore, instead of paying integrated solution-shops to conduct all aspects of an engagement, clients are moving towards modular providers who specialize in certain aspects of the value-chain. For instance, market research to value-added model companies such as Forrester and Gartner. Additionally, client engagements in broken down into several parts and outsourced to facilitated-networks such as Gerson Lehrman Group. Several boutique consulting firms have come into existence, offering specialized service and research insights. With the democratization of knowledge, opacity of management consulting is gradually fading as clients start to question the need to pay big fees to the premium consulting

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