The challenges of business consulting
The business consulting market in India is growing at a rapid pace, projected to touch the $12 billion mark by the end of 2018. The management consulting segment contributes nearly $1.5 billion to the overall revenue of the business consulting industry. After maintaining a consistent growth rate of 6.75% for a couple of years, the industry is now at the onset of major disruption.
DIGITAL TRANSFORMATION AND AUTOMATION
The introduction of the latest advents in technology and digitization is leading to more techoriented consulting work for consulting firms. With the continual development of technology, the needs of businesses keep on changing. Be it healthcare or telecommunications, technology is greatly impacting how organizations work. Where startups are adopting digital technologies for bringing innovative services to its clientele, the well-established businesses are switching to AI, robotics, and machine-Learning technology for transforming their business culture and bring agility into their organizations. For serving the counselling organizations, the consultancy firms first have to adopt the disruptive change themselves and train their workforce enabling them to provide quick, profitable, and smart solutions to the clients. AI and automation significantly boost the productivity of the consultants and the customer experience.
For example, usage of AI-like technologies can enhance the firm’s business processes as well as bring innovation to the services promising them higher growth. But, the budget, implementation, and training issues will be a great challenge for the consultancies.
GIG ECONOMY
Gig economy or open talent economy reshapes the way how business works. Because on-demand talent costs cheaper than a traditional counterpart and is specifically hired for working on a specific project, the organizations, especially the consulting firms are embracing the system of gig economy. For consulting firms, it is one of the best ways to tap on the right talent specialized in a particular area bringing to their clients the much-needed skill set and experience. However, the quality of work, availability of talent, the efficiency of the non-permanent staff is a concern for the HR managers.
The revenue generation for consulting firms depends on the strategies and services developed by the consultants in close interaction and collaboration with the clients. They might even require field-tests for which many on-demand or freelance employees are not ready. Also, the consulting firms have started going digital with intuitive platforms and software for which they have to pay a hefty subscription amount. Misuse or exploitation of such paid tools and software and the manipulation with data meant to be kept confidential is a threat for the consulting firms. Unlike traditional employees, the consulting firms have to face a tough time while grooming the flexible workforce and encouraging them to take a proactive approach to project completion.
PERFORMANCE-BASED BILLING SYSTEM
Moreover, the consulting industry has also witnessed the emergence of fees based on outcomes or performance-based billing. In such a pricing system, the work hours of the consultant are not considered at the time of billing. Instead what matters is to what extent do consultants achieve the objectives and targets given by the client. This pricing style saves the client from paying extra bucks to the consulting firms and also provides the consultant firms a benchmark in order to prove their worth. However, the small-scale consulting firms lag behind when it comes to implementation of this performance-based billing system. Many a time, the client does not agree to change the tentative amount proposed to him earlier after the consultant achieves success. The effective implementation of the performance-based billing totally depends on the sophistication of both the consulting firm and the clients entering into the contract.
Moreover, one of the biggest nightmares the consulting firms have is by the time a consultant prepares a research report or any strategic plan for the client after collecting data, analysing it, and pilot testing, those trends and issues become outdated and are replaced with the new emerging disruptive forces. Such vulnerabilities affect the revenues of small-scale consulting firms which do not have an easy access to Big Data, Data Analytics, Cloud, and other cognitive technologies. However, the consulting giants who are the early adopters of dynamic nextgen technology dominate the market leveraging the relevant insights, automation devices, and scalable data gathering. They are better able to advise clients on the seamless implementation of disruptive technology as they themselves harness the potential.
(The author is founder & MD, SL Consultants. Views expressed here are personal)