Global consulting sector is one of the largest and most mature markets within the professional services industry. On an international level a conservative estimate puts, the turnover to rise from $152 billion in year 2019 to 208.8 billion by the year 2026.  Much of the growth we are witnessing today in consulting industry is due to the additional support of client manpower by support services from consultancies. We witness changing market conditions like i) Use of digital technologies ii) digital natives getting into more and more decision making roles iii) the increased use of Artificial intelligence iv) the market potential for data-based services v) data analytics, big data and cloud getting more attention vi) Shorter technology life cycles or agile implementation approaches and vii) finally engagement of business in digital products and services. 

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As you can see, the traditional boundaries between the market segments are disappearing and vendor offerings are converging, and clients find it increasingly difficult to perceive differences between service providers in each segment. Though some segments of strategy consulting, low cost consulting assignments and spot consulting can be visualized today. Many times, clients are segmenting the scope items and buying modular services from different service providers. The intention for such approach is to aim for the best of breed solutions in all aspects. This reduces pricing power, which in turn are seriously impacting the profitability of many consulting companies.

Examples of changing consulting engagements:

Some time back I have briefly worked for an organization which is a specialized consulting firm handling highly skilled management consulting projects. It has innovative business model of managing the projects. They analyse each project and identify team of experienced freelancer consultants to work on the project. They will assemble their project team which are best in the market with competitive pricing and ensure consultants work full time on the projects without other distractions. They have the provision of their consultants working wherever they are and eliminate office infrastructure, expensive buildings, unstaffed time of their employees, recruiting and training. This firm did not tried to provide a single point for all the services rather helped in arranging high knowledge consultants for solutions around data analysis interpretation, creation of innovative solutions with community of experts and connecting to on-demand experts. Finally, the firm did not operate on standard per-diem concept, rather was proposing module by module, completing web shops, consulting product configuration and pay per use and even subscription-based services. 

I happened to also watch few consulting engagements where a Consulting firm was rendering asset-based consulting rather than the traditional people driven project management. Here majority of the consulting is based on the use of proprietary tools the company has developed over years. To define the concept of asset-based consulting it involves packaging of ideas, processes, frameworks, analytics, or other intellectual property. It uses set of software tools and limited manpower. The implementation cycles are less compared to traditional projects. Same group of cross company senior experienced team spanning across multiple countries was mostly engaged to deliver the assignments. For the organization it was easier to realize the ROI and easier to understand the scope covering the transformation journeys within the organization. I noticed how this firm is trying to show case as one stop shopper covering strategy, operations, design, and technology consulting, though as I mentioned above, many times organizations shift to dedicated services firms for managing these requirements.

The other areas of Transformation I have witnessed is Support of applications for a portfolio of clients. The said organization manages 3rd party application support for the client applications. This company had their own platform which is used to securely log in to the servers of their clients. It has multiple levels of secured authentication to navigate to client environment. It has a ticketing tools which is accessible based on the client. Each consultant is paid based on the number of tickets or logging period of number of hours he is working on the ticket, as a factory model. It has collaboration tools and secured document repositories which are used while communicating with the clients. This company is strategically placed to disrupt the consulting market but needs to tap the opportunity.

Besides the scenarios I have elaborated above, we also notice how different client organizations hiring former consultants from different consulting firms, who are versed with project scoping and execution.  These companies operate with an inhouse project team who hires freelancers from external market. They hire experienced team members for short term project execution and handle all the management activities in house including the PMO.  Usually such project teams execute routine projects which are executed by the client many times in the past or even like the ones which have been executed with some level of complexity. I also notice how different clients are seeing for system integrators on guidance towards novel projects which are latest digital requiring creativity and innovation, for which talent may not be available internally.

Case studies from Allied Industries like Tax Consulting & Legal Consulting and key learnings –

e-Consulting of Medical:

Sometime back during this pandemic, I communicated with my Professor, who is living in US about his wellbeing. While communicating, my professor commented that his daughter is doing fine and continuing medical practice via online. e-consulting of medical is another area which has been transformed in recent past. There are many case studies of successful VC session with patients, while carrying out consultation. One of the challenges quoted include inability to carryout physical examination when it required the most. Almost all the studies or reviews conducted conclude both patient experience or doctors experience, who did not notice major difference pre digital and post digital scenario. In some cases, patients were very positive that they were not needed to travel to clinic.  Compared to e-consulting, Health Care transformation is a broader area which we are witnessing for past few years. Some of the learnings of Digital Transformation of Health Care are patients are empowered and are becoming decision makers, the higher the operational innovation high is the level of patient satisfaction. Successful e-consulting firms are those who are large organizations with diverse affiliations and hospital staff engaging in flexing, deepening and revitalizing and few suggested following crowdfunding to avoid bankruptcy.  

Internal Auditing of Assets:

The other area where digital transformation has impacted the consulting is the way Internal Audits or even Tax consulting is managed. I used to closely watch my spouse go to Taj Banjara, for auditing into a secured room with innumerable night outs to manage their auditing. Thanks to Episodes in Netflix like Bad boy Billionaires or similar stories we can imagine the level data quality issues despite Sarbanes- Oxley act or other regulatory frameworks in place. Now with digitalization, auditing firms are offering new services, are witnessing significantly improved quality of data with an improved and digital avatar of auditing personal.

The other area of tax is individual tax and return management. We have noticed it has changed. We have firms who manage the documentation, return filing, payments all most all over the portal in a secured manner.

Key Learnings: 

Borrowing the digitalization experience discussed in allied consulting domains like Health Services, Internal Auditing, Legal, below are the list of questions to assess your digital readiness

  • Do you follow market information for dynamics in the way organizations are reacting to digitalization of consulting engagement?
  • Do you have a digital strategy determining goals and actions, which integrates digital technologies with consulting business strategy?
  • Do you have agile methodology and tools & digital technology capabilities which can help in engagement of shareholders with internal and external to the organization?
  • Do you have a platform strategy which can help in bringing together the digital technology providers and digital technology users?
  • Do you have digital technology infrastructure for support via VPN, collaboration tool, methodology, document management in secured way?
  • Is your organizational man power aligned to new digital IT skills and aligned to work on adhoc basis on different projects who may be outnumbered by contracting staff?
  • Finally, do you advocate open minded culture within your organization demonstrating creativity trust, and risk-taking.

Before I close the topic, I would like to leave with some recommendations for the digital disruption in the consulting industry

  • Identify the services which are low hanging fruits for which you can easily transform your offerings
  • Assessment technology requirements for consulting offerings or managing the client landscape. 
  • Choose the right set of man power and transition them to digital knowledge by offering various trainings or skill set enhancements activities.
  • Collaborate with digital technologists and niche digital players or even human resources firms who have already offering the consulting digitally by experiences gained on different engagement tools, security set up, methodologies and other experiences.
  • Inculcate the right digital culture and mutual trust while working digitally and via remote platform
  • Identify and set up security and data confidentiality activities while working remotely with temporary staff.

So, how is your organization / firm embarking on this journey, do assess and ponder over it.

Thanks

Jayakumar

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