Procurement managers want specialist consulting firms…not generalists
A new report by Sourceforconsulting.com (released on 19th January 2012) has found that demand for consulting services remains weak, leading to an increase in pro-bono consulting – doubling in just six months to represent over a tenth of all work. The report also found that consultancy buyers are predicting a 3 per cent contraction in total consulting expenditure over the first six months of 2012. However in the financial services sector, the largest sector for consulting, the predicted fall is nearer 10 per cent.
The report also says that companies facing economic uncertainty are choosing to cut back on their use of management consultants, and preferring to do work in-house wherever possible. As a result, a fringe industry of in-house consulting units is developing.
Investing in the relationships for the future
Consulting firms are now responding to a falling demand by making sure they’re investing in the relationships which are most important to them, in the hope they will be repaid once the market picks up.
Edward Haigh, Director of Sourcingforconsulting.com said:
“There’s sense in the strategy: a culture of discounting is hard to stop once it has started, particularly with increasingly tenacious procurement departments nipping at your heels for more, and offering one person of a ten-person team free of charge displays both confidence in your rate and a willingness to recognise the client’s needs at the same time. It also keeps people, who would otherwise be on the bench, busy and learning.”
The Big Four and financial regulation
The Big Four are still managing to fare better than expected, picking up work off the back of regulation in the financial services sector. The report says that their scale, brand and flexibility are something they clearly have going for them, but they still face two major barriers. The first is the way they structure their businesses, as procurement managers don’t believe they’re capable of pooling resources from a number of different locations to create strong international project teams. Secondly, organisations’ still perceive them to have a lack of specialism, in a market where there is a growing demand for specialisation.
Procurement managers want specialist skills
The report also found that while procurement managers accept they need to buy consulting services, they’re less interested in broad-based generalist consulting than they were in the past, now preferring specialist skills that reflect the maturity and sophistication of most industries in developed markets. Edward Haigh, comments: “What clients need is the sort of deep industry insights that will allow them to differentiate themselves in highly competitive markets, and for that they need the help of specialist consultants.”
Operational efficiency moves up the corporate agenda
At a time when most procurement managers are expecting consulting spend overall to fall, half of them say they’ll be spending more on operational efficiency advice. Only 10 per cent say they expect to spend less. If a focus on operational efficiency is unsurprising, given the current economic conditions, then the number of people expecting spend to increase may still be.
IT consulting remains strong
IT consulting looks set to be in steady in 2012, after making a comeback in 2011, and the retail and utilities sectors look as good a bet as any for consultants working in this area. HR consulting is failing to meet the demand from clients for HR practices and strategies with an international dimension. This is partly due to a lack of innovation, but also because it’s service which benefits from changing phases in the current economic climate, for which there is little underlying demand at present.