38.1 Your market

The thrust of what a consulting firm can do for its clients’ and its own future is to be alert to the changes occurring in the consulting market. This means the changes that have already taken place and to which many firms have probably started to react, as well as emerging changes that may be hardly perceptible, and changes that are predicted but not yet certain.

The principal long-term change, which has already generated important demand for consulting in the past decade and will continue to do so for many more years, is the shift to an information and knowledge-based economy. Firms active in all productive and non-productive sectors, including those in the IT sector themselves, are less and less capable of following all the developments that may affect their business, and maintaining up-to-date capabilities for making choices and decisions concerning their markets, strategies, alliances, customer relationships, logistics, financing, intellectual capital and its protection, effective management and control systems, outsourcing, productivity improvement, and so on. Hence they are turning to external sources of expertise, in particular to management, business and IT consultants.

A common challenge faced by firms in all sectors concerns the Internet and e-business: How important is it really to them? How deeply will firms be affected? How should the Internet and e-business be reflected in corporate strategy? How should physical and virtual processes in the value chain complement and reinforce each other? What pitfalls and inefficiencies are to be avoided? What lessons must be drawn from recent experience? Who can provide the best help? Even very large industrial and service concerns have to be selective in deciding about their core activities and strategies and need to purchase a great amount of knowledge, know-how and expertise from external sources. They need consultants and other professional service providers now and they will need them even more in the future. This is also the main reason why outsourcing has been progressing so rapidly as to become a major source of income for large consultancies in management and IT.2

How far can this go and where will it stop? It is difficult to say, but it is possible to visualize extreme scenarios in which the totality, or a very large portion, of the management function is outsourced to external management-cum-IT service providers, while the client provides the basic business directions, resources and corporate governance. This is already happening in contexts where consultants are used for managing turnarounds, or company management is subcontracted to them for prolonged periods by firms in difficulties. A reverse trend can also be seen, however: insourcing from consultants and other professional service