Use of body-shops will decline…as specialists gain a larger share of the consulting market…
A report about consulting trends in the Gulf Cooperation Council (GCC), released by Sourceforconsulting.com today (15th May 2012), suggests that the GCC consulting market will become more polarised, as clients increasingly separate their need to get decisions independently-validated from their reliance on specialist expertise. Firms falling between these two stools will be relegated to the status of body-shops.
The report found that almost a sixth of consulting work is driven by the need for independent validation, work that’s likely to go to bigger, global consulting brands. However, the greatest growth is likely to come from the demand for specialist skills – and GCC clients are becoming increasingly demanding about the depth of skills they need.
Commenting on the demand for independent validation, Fiona Czerniawska, Joint Managing Director of Source said: “What surprised us most was not the scale of work for which the need for external validation is the driver, but the matter-of-factness with which the need is treated, particularly at the most senior levels.
Chief executives and board directors use these firms to influence truculent stakeholders within and outside their organisations and are comfortable with doing so. They simply see it as part of doing business.”
Specialise, but don’t ‘body-shop’
A third of all consulting in the GCC is driven by clients need to access specialist skills, and clients now place greater importance on the skills of an individual than the brand of a firm, resulting in a decline in the use of generalist firms and body-shops. The report says that this is driven by an increasing scepticism about the ability of generalist firms and body-shops to provide the depth of expertise they need.
Public vs. Private
Growth in the public sector will come from a small number of big projects rather than a more widespread shift, and expenditure is split evenly between specialist and generalist resources, and between individuals and firms. Public sector clients are slightly biased towards using generalist resources and are substantially biased towards the traditional advisory relationship. The greatest drivers of demand for consulting services will be in the planning, management and implementation of large-scale programmes, and in responding to regulatory changes. Almost all (80 per cent) of clients in the public sector think expenditure will stay the same compared to around 30 per cent in the private sector.
By contrast, the market for consultants in the private sector will be more polarised in the future. Dissatisfaction about the quality of work done by body-shops will result in more of this work going to bigger, well known consulting firms.
The future
But clients’ choice of consulting firm isn’t something that changes either dramatically or quickly – with 60 per cent of expenditure in the next 2-3 years expected to be spent with the same consulting firms. There is also a shift away from using consultants to simply supply skills not available internally; clients will be more likely to buy these from specialist consulting firms, and although larger firms may lose some of the more specialist work, this will be more than offset by winning work that might have gone to body-shops in the past.
In the report, an IT director of a Natural Resources Company comments: “Some international consulting firms adopt a patronising view of Middle Eastern companies, assuming that we have very little in the way of in-house skills, but certainly where technology is concerned our skills are as good as, if not better than, some of the consultants we work with. What we don't have are many people with such skills.”