Home' A Plus Magazine : Nov 2012 Contents November 2012 15
Just as schadenfreude
had to be borrowed
from German to ex-
plain the concept of
expressing delight at
someone else's mis-
ery, there is no pre-
cise English expres-
sion for turning challenges and difficulties
into opportunity. But that's what the consult-
ing industry has been focusing on for years.
"In the past 10 to 15 years we have seen
more problems," says Joe Ngai, managing
director of the Hong Kong office of McKinsey
& Company, one of the world's largest man-
agement consulting firms. "Every corpora-
tion we go to, we see problems. And problems
are good for us because you need someone to
solve those problems."
Ngai's optimistic candour -- expressed at
a recent business forum -- is all the more re-
markable because the consulting business is
usually reluctant to talk about itself. While
barely a day goes by without a consulting firm
issuing an industry survey or business out-
look, the firms are surprisingly averse to dis-
cussing their own sector's prospects.
Spokespeople for two of the world's larg-
est consulting firms, Accenture and Bain &
Company, said that their staff couldn't dis-
cuss the industry itself, while Boston Con-
sulting Group, another global giant, did not
respond to a request for comment.
This reticence may be understandable.
After all, the jury is still out on whether
the consulting industry’s problem solving
outweighs its problem creation. McKinsey
famously advised U.S. telecoms giant AT&T
in 1980 that there was little future in mobile
phones, forecasting a market in 2000 that
was less than 1/120th of its actual size.
Nevertheless, the consulting industry has
continued to grow: Plunkett Research fore-
casts worldwide consulting revenues in 2012
of US$391 billion, up almost 7 percent over
2011's total of US$366 billion.
The consulting industry suffered a set-
back as the global financial crisis took hold --
2009 saw a 9 percent decline in revenues
over the previous year, according to Kennedy
Information, an industry data provider.
But growth resumed the following
year -- McKinsey saw revenues rise 6 per-
cent to US$7 billion in 2010 -- as companies
sought the services of consultants to over-
see restructuring, mergers and acquisitions,
turnarounds, corporate regime change and
performance improvement. Concerns over
complying with ever-tighter regulatory re-
quirements also boosted the business.
The market potential did not go unno-
ticed by the Big Four accounting firms who
have re-entered the market in a big way since
the aftermath of the collapse of Enron, when
regulator and media pressure forced many to
spin off their consulting arms. For instance,
Deloitte's consulting revenue grew 15 per-
cent in 2010, more than twice the pace of the
China sets the pace
The Asia Pacific, with its tight-knit family
companies and established connections, has
been a harder slog for the consultants but
slowly doors are opening.
New York-based Alvarez & Marsal has
invested heavily in Asia in recent years, espe-
cially in the China market. "Demand in Chi-
na is on the rise," says Olly Stratton, manag-
ing director and co-head of the firm's Asian
practice. "I think it will continue to evolve
and there will be more opportunities."
McKinsey, too, sees potential in China.
The company is among the leaders in consult-
ing for Chinese clients, who seek advice on
managing strategy, operations, information
technology and human resources. More re-
cently, Chinese clients have used consulting
firms to advise on restructuring, expansion
and foreign investment, brand building, cor-
porate governance and long-term growth.
When management consultants entered
the Chinese market in the early 1990s, most
operated from Hong Kong regional head-
quarters, but that has changed. "For most
professional services today, there are no
more Hong Kong offices -- everyone is calling
themselves the Greater China office," says
Ngai. “Most consultants today are spending
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