By Alison Huntington.
We ask clients a simple question to gauge their opinions about value: How much value do they think a consulting firm added in relation to the fees they paid it? The troubling answer for consultants in the TMT sector is that few think the value added was worth more than the bill at the end.
This is a bit of a departure from what we’ve observed in the industry in the past. Previously, TMT clients were pretty harsh about quality compared with clients in other industries, but far more impressed with the value added. And this made sense—much of the TMT consulting market is made up of telecoms clients operating on thin margins, who simply can’t afford the luxury of bringing in a high quality firm that doesn’t add much in the way of value. If they wanted that, they’d turn to contractors who are far cheaper. Consultants simply had to prove their worth by going above and beyond the brief, or risk being chucked out of a major client in a highly concentrated market (as the telecoms business tends to be).
This year, TMT clients are the most positive of any about quality, but much more critical of the value added—only public sector clients are less impressed.
What’s changed? We suspect the rise of high-tech companies—by far the fastest growing sector for consultants within TMT—has something to do with it. Consulting firms face a real threat from high-tech companies for the brightest and best talent, struggling to shift the suit-and-tie stuffy image to compete with the glamour of Silicon Valley and generally more relaxed image of technology companies. Much like how clients in financial services tend to think they’re quite a bit smarter than consultants because they attract highly intelligent, ambitious people, clients in high-tech tend to think the same. And, really, what can a consulting firm teach Google about cutting-edge technology?
So what we could be witnessing here is a shift towards a more transactional view of the consulting industry—where clients use consultants when they have a known problem that they need fixing, leaving their own industry experts to work on the really exciting, game-changing stuff. Indeed, even when TMT clients get consultants involved in areas like digital technology and business strategy, it’s more often than not driven by a need for capacity (they simply don’t have enough resources themselves) rather than a need for specific expertise*; it’s difficult to add much value when you’re brought in simply to make up the numbers.
*Data gathered for our Strategic Planning Programme Part 1: Forecasts for 2016 report. To view an extract of the TMT client perception report, click here.