BUSINESS CONSULTING INDUSTRY 1 Introduction to the Consulting Industry Global consulting industry revenues will be about $366 billion

in 2011, according to Plunkett Research estimates. This represents reasonable growth from $345 billion in 2010. Consulting is a somewhat cyclical industry. After a decade of sizzling growth and enviable profits in the 1990s, the consulting business was forced to pull in its reins during 2001-03. The stock market bust of 2000-01, particularly in the technology and telecommunications sectors, caused this setback. Startup companies that were once lucrative consulting clients disappeared under crushing financial losses. Meanwhile, a general economic slowdown in most of the developed world further hampered the consulting industry. Consultancies posted significant growth from 2005 through 2007. However, 2008-09 marked a challenging period throughout the world, in light of the global economic slowdown and shrinking corporate budgets. Some companies cut their employee rosters and/or restrained hiring

Positive factors for the consulting industry over the mid-term: 1) Some government funding of new initiatives will generate substantial new consulting revenues: a) Major transportation infrastructure projects (including high-speed trains) b) Health care reform, particularly a focus on digital health records in the U.S. c) Research and development projects in many fields, including advanced battery technology, biotechnology and nanotechnology. 2) Consultancies that focus on projects that clearly reduce business costs and enhance operating ratios in a reasonably short period of time will find a ripe market (such as, consultants who focus on cash flow enhancement, supply chain efficiency and manufacturing efficiency). 3) Consultancies that have deep experience in debt restructuring and financial workouts will remain in high demand, particularly in the fields of commercial real estate and debtfinanced acquisitions.

5) Consultants who assist firms in lowering employee benefits costs are in high demand. 6) Consultants in environmental specialties, such as carbon emissions, and energy efficiency will be in high demand. 7) Consultants and advisors in the fields of corporate expansion into emerging markets, information technology, mergers and acquisitions will be in high demand. Source: Plunkett Research, Ltd. In emerging nations and the booming economies of parts of Latin America and Asia, the consulting industry and related sectors are enjoying soaring growth and a very positive rebound from the recent recession. Growth in global trade has returned, fueling demand for consulting of all kinds, including management, HR, industrial and technology. Rapidlygrowing economies in such nations as South Korea, Brazil, China, Singapore and Malaysia are providing a wealth of new work for consultantsIn recent years, many types of consulting and accounting projects have been offshored to a growing extent. Initially this was due to efforts by firms in North America

and Europe that wanted to take advantage of the lower hourly fees charged by professionals in emerging nations. More recently, however, offshoring of such tasks has become necessary in order to conduct consulting projects in the growing nations where practices must be applied. As multinational companies headquartered in the U.S. and elsewhere continue to open offices, factories and research facilities in nations such as India, Malaysia, Indonesia and China, consultants must follow. The consulting industry is a multifaceted, global business sector that is facing many challenges and evolving quickly. At the highest level of the business is management consulting, the segment that advises top executives and boards of directors at Fortune 1000 firms on strategy and organization. McKinsey & Company, Inc., Bain & Company, Inc., Boston Consulting Group, Inc. and a handful of other companies are the most elite. Such firms may charge their clients anywhere from $300,000 to $1 million in monthly fees, with top consultants billing as much as $5,000 daily plus expenses, and associates at $1,500 or so. These consultants engagements for a multinational corporation

may include analysis of multiple divisions and involve travel to several continents. Their suggestions often result in sweeping organizational changes, adding (clients hope) tens of millions of dollars to the yearly bottom line. Management consultants may take assignments involving many aspects of a clients business, including marketing, acquisitions, finance, information technology, manufacturing, distribution, human resources, divestitures, government relations, facilities, telecommunications, environmental matters and more. The growing globalization of business and industry in general led inevitably to the globalization of the leading consulting companies. Many consultancies operate worldwide and have multiethnic, multilingual employee bases. In particular, major consulting firms have opened significant offices in Brazil, India and China in recent years. Annual revenues at top, global consulting firms run in the billions of dollars, and top consultants may each earn $200,000 to $500,000 or more yearly in return for grueling hours, high stress and many, many days spent

traveling far from home. In an effort to control costs, some corporations that were formerly desirable clients have built their own internal consulting staffs. Despite what appears to be an economic recovery in much of the corporate world, the days of unrestrained corporate spending are long gone. Going forward, consulting firms will be forced to compete fiercely for their engagements, and the engagements they receive may be relatively short-term or less profitable than assignments of the recent past. Corporate clients will be focused on a provable return on investment for their consulting dollars spent. Specific goals will be set early in the process, and consultants will be under intense pressure to meet those goals. Large, multifaceted consulting companies will face fierce competition from smaller, niche companies. One of the fastest-growing segments of consulting has been information technology (IT). This segment includes consultants focused on e-commerce; telecommunications; intranet and Internet strategies and functionality; hardware systems design and implementation; software design,

acquisition and implementation; and web site design and operation.