Career Roadmap

Consulting

Overview
Consulting firms are traditionally among the largest employers of top MBA and college graduates. But with single-digit growth projected for the industry in 2004 and 2005, expect competition for jobs to be as tough as ever.  More than half the people in top MBA programs and a significant number of college seniors flirt with the idea of becoming a management consultant after graduation. It’s a high-paying, high-profile field that offers students the opportunity to take on a lot of responsibility right out of school and quickly learn a great deal about the business world.

In essence, consultants are hired advisors to corporations. They tackle a wide variety of business problems and provide solutions for their clients. Depending on the size and chosen strategy of the firm, these problems can be as straightforward as researching a new market or as complex as totally rethinking the client’s organization. No matter what the engagement, the power that management consultants wield is hard to scoff at. They can advise a client to acquire a related company worth hundreds of millions of dollars, or reduce the size of its workforce by thousands of employees.

One word of clarification: "Consulting" is a big, one-size-fits-all term that includes virtually any form of advice-giving. This industry overview focuses primarily on the flavor known as management consulting. Often called strategy consulting, this segment of the industry includes firms that specialize in providing advice about strategic and core operational issues. Although some of the highest profile firms populate this segment, they’re not the only ones doing consulting.

Trends

Last year, Consultants News reported that between 2002 and 2005, the government sector was poised for double-digit growth, much of it thanks to the Office of Homeland Security. After 9/11, a number of firms, including American Management Systems, BearingPoint, Booz Allen, EDS, and IBM Global Services, rushed to offer homeland security consulting. In 2004, however, public sector business appears to be slowing down, with analysts suggesting financial services will make a comeback. This could hurt the bottom line of some of the public sector winners, such as BearingPoint and Booz Allen, but it will undoubtedly help that of many others.

Outsourcing has been one of the greatest revenue builders for many of the IT firms like Accenture, but a number of India-based firms, such as Infosys, are getting in on the game. These players can charge $30 an hour versus the $150 IBM Global Services, Accenture, and EDS must charge. To counter their overseas rivals, some consulting firms are throwing in hardware and other consulting services to sweeten their bids. It doesn’t seem to be enough to bridge the gap: Indian firms have advantages on both cost and quality. Look for North American firms to begin acquiring Indian firms (which is what IBM did with Daksh eServices, one of the world’s largest call center operations) as well as Indian outsourcing to boom.

Computer hardware and software firms continue to elbow their way into consulting through business process outsourcing—wherein service firms take over management of noncore business functions such as purchasing or accounts payable. Web-based applications have made it increasingly easy to outsource this work as well as to manage it remotely. Oracle, HP, and Dell are a few of the hardware and software firms following the lead of IBM Global Services by beefing up their consulting services. As one consultant says, “The large hardware manufacturers know that their traditional core businesses have become little more than commodity businesses and that the real value is in services. Consulting services are a perfect complement to hardware and software sales. Manufacturers not only benefit from higher margins with consulting services, but they can also build their hardware sales through an enlarged relationship base.”

Segments

This industry profile deals primarily with management consultants, the elite consulting firms that make the most money advising the biggest and most powerful companies in the world. However, there are a number of specialized groupings within the management consulting field and many more types of consulting firms that provide specialized advice and services in other areas.

To help you get a better handle on the options, we’ve grouped the consulting world into several different segments.

1. Industry Elite

This group is populated by a few top strategy firms and a host of smaller challengers. The bulk of these firms’ work consists of providing strategic or operational advice to top executive officers in Fortune 500 companies. For this, they charge the highest fees and enjoy the most prestige. They also have the fattest attitudes, work the most intense hours, and take home the most pay. Representative firms include Accenture, A.T. Kearney, Bain & Co., Booz Allen Hamilton, The Boston Consulting Group, Marakon Associates, Mercer Management Consulting, McKinsey & Co., and Monitor Group.

2. Boutique Strategy Firms

Firms that specialize along industry or functional lines. Although often smaller, these firms may have top reputations and do the same operations and strategy work the elite firms do, but with more of an industry focus. Representative firms include Cornerstone Research (litigation support), Gartner Group (high-tech research), and PRTM (high-tech operations).

3. Technology and Systems Consulting Firms

Firms here typically take on large projects to design, implement, and manage their clients’ information and computer systems. Technology consulting often takes place in the bowels of the client organization. In general, this kind of consulting job requires large teams of people who actually do the computer work. As a result, there are usually more opportunities for people from undergraduate or technical backgrounds than from MBA backgrounds, but it’s not the same high-prestige work strategy consultants are known for. Representative firms include Accenture, BearingPoint, Capgemini, Computer Sciences Corporation, EDS, HP Technology Solutions Group, IBM Global Services, Novell, Oracle, SAP, and Synopsis.

4. Human Resources Consulting

This can include everything from designing an employee evaluation and compensation system to conducting organizational effectiveness training to helping an organization through a significant change event, such as a merger. HR consultants often work as long and travel as much as their counterparts in general management consulting. Representative firms include Accenture (Change Management Group), Buck Consultants, Hay Group, Hewitt Associates, Mercer Human Resource Consulting, Towers Perrin, and Watson Wyatt & Company.

Job Prospects

After several down years, firms began recruiting again in 2004. The economic recovery kicked in around August to September 2003, and is expected to drive single-digit growth for the consulting industry through 2006. “I think [2004] is a year of renewed growth for the consulting industry, which means a period of renewed growth for recruiting as well,” one insider says. Firms are reporting more contract wins and utilization rates well above the norm. “The outlook is positive,” another insider says. “We see a movement upward in the number of hiring. We’re seeing a lot more deals, and our capacity is at the highest mark that it’s been in a couple of years. The management team absolutely thinks the work will continue.”

This should be good news for graduates, right? Well, kind of. Fueled by corporate strategy, reengineering, enterprise resource planning (ERP), the Internet boom, and Y2K technology scares, the consulting industry grew at mostly double-digit rates from the 1970s until 2000. But when the economy hit a wall, consulting crashed hard, too. Overall revenues shrank in 2001, stayed flat in 2002, and grew about 3 percent in 2003.

An ongoing economic slump was responsible for the industry’s poor performance, but other factors have been in play as well. Many companies have hired former consultants, reducing their reliance on outside firms. Many have grown more demanding, forcing firms to hire industry experts over MBAs. The focus on cost-cutting and caution regarding IT and other spending chipped away at the availability of consulting work. Fee growth has generally been flat since 2001. Outsourcing, which transfers activities from a company to a consulting firm, provides stable margins, but doesn’t create more jobs for consultants.

The growth that appears to have begun won’t mirror that of the go-go 1990s. “I don’t think we’ll see the spiking growth that we saw in the late ’90s,” says an insider. “We moved through the early 2000s on cost reduction. Now the focus is on growth of the bottom line. The focus isn’t so much on how fast I can grow my top line or how I can cut my costs, but how can I improve my productivity. I think those initiatives are going to drive the opportunities for growth in the consulting industry.”

 Source:  WetFeet Press

Print Resources Available in the CDO

Ace Your Case: The Essential Management Consulting Case Workbook (Wet Feet Press) - describes the different types of case interviews and preparation tips

Consultants and Consulting Organizations Directory – lists consulting groups and consultants categorized alphabetically, geographically and consulting activity

E & J Press Consulting Flash Cards - interview preparation flashcards.

Harvard Business School Career Guide: Management Consulting - industry overview, top US consulting firms and their recruiting process and career descriptions.

Consultant News – monthly publication of company news and trends in the industry

Online Resources

Top Consultant – www.top-consultant.com

Consultant News – www.consultant-news.com

Consulting Base - http://www.consultingbase.com/

Inside Consulting - http://www.insideconsulting.com/

More Resources - www.som.yale.edu/careers/resources/career_sectors.asp

Job Search Web Sites - www.som.yale.edu/careers/jswebsites/jswebdefault.asp

Consulting Firm Sites

       Accenture

       Advisory Board Co.:

       American Management Systems:

       Archstone Consulting

       Arthur D. Little:

       A.T. Kearney:

       Bain & Co.:

       Booz Allen & Hamilton:

       Boston Consulting Group:

       Cambridge Group:

       Cambridge Technology Partners:

       Cap Gemini Ernst & Young:

       Charles River Associates:

       Corporate Executive Board:

       Deloitte Consulting:

       Development Associates, Inc:

       Diamond Technology:

       Gallup Organization

       Huron Consulting

       Inform, Inc:

       Katzenbach Partners

       KPMG Consulting:

       LECG Consulting

       LEK/Alcar:

       Marakon Associates:

       McKinsey & Co.:

       M.C. Wilhelm Associates

       Mercer Management Consulting:

       Mondial:

       Monitor Co:

       Navigant Consulting:

       NERA:

       PA Consulting:

       Pittiglio Rabin Todd & McGrath:

       PricewaterhouseCoopers:

       Quintiles Transnational:

       SG2:

       Sibson & Co.:

       Strata

       Tigris Consulting

       Towers Perrin:

       Watson Wyatt

Consulting Career Preparation Timeline

As previously mentioned, consulting opportunities, especially at the internship level, are intensely competitive. In order to successfully navigate the consulting recruiting process, discipline, intense preparation, and focus are required. Internship positions are notoriously scarce; if you are not successful in landing a consulting summer internship, you should not feel discouraged. Many of our graduates who have successfully received full-time consulting offers pursued various types of internships that provided them with the analytical and personal skills that helped make them receive their final offer.