4.3. Types of consulting firms in Russia
Classification by size
Consulting companies in Russia differ in size. Analysis of the structure of the consulting services market in Russia indicates the presence of the following segments 32:
Large Consulting Firms. This classification represents the largest players in the management consulting industry whose primary service is providing expertise and consultation to management.
Big Four Accounting/Consulting Firms33 and top consulting companies. A handful of large public accounting and consulting firms lead the industry on an international scale. They include the so-called Big Four: PricewaterhouseCoopers, Ernst & Young, Deloitte, and KPMG. Also top consulting companies that are Accenture, Bearing Point and IBM. Consulting divisions of the Big Four are especially strong in information technology (IT) and management information systems (MIS) consulting. These firms typically offer strategic or generalist management consulting services as well.
Small Firms/Boutiques. Small firms or boutiques often provide specialized services or offer expertise that focuses on one industry or a single business practice area. These firms tend to be small, lesser-known niche players that do not regularly compete directly with the larger consulting organizations. Many of these firms operate in a single, geographic region. Some small or boutique firms service only one client.
Sole Practitioners. This group encompasses many outplaced or retired executives and part-time consultants who offer expertise in areas where they have a great deal of experience. Sole practitioners are often engaged by smaller firms and even their previous employers. This classification of the consulting industry also includes university professors who provide consulting in their areas of teaching expertise.
Classification by service
Internal Consulting Organizations. Large corporations may have recurring project work for which the expertise of external management consultants would be required on an ongoing basis. Many such firms have developed internal consulting staffs in order to deal with this demand in a more cost-effective manner. Such internal organizations may be generalists or may specialize in corporate strategy, human resources issues, information technology, or other areas that are critical to the company's operation.
IT/MIS. The information technology segment is the largest segment of the consulting industry. The Big Four all provide expertise in this area and draw substantial revenue from it as well. Firms that specialize in information technology tackle business problems by applying technology to provide solutions.
Generalist Consulting. Generalist management consulting firms typically provide advice on strategy to their clients but may also have internal expertise in specific industries, such as banking or health care, or in particular practice areas, such as new product development or operations. Generalist consulting firms often provide consulting in IT/MIS and compensation/benefits as well. Examples of generalist firms include McKinsey & Company, Inc. (focus on strategic consulting); Allen & Hamilton, Inc.; and Arthur D. Little, Inc.
Strategy Consulting. Strategy consulting firms specialize in providing advice on corporate strategy to senior executives—answering such questions as, "How can our firm improve profitability?" Strategy firms compete with generalist firms for strategic engagements but do not provide the nonstrategy services of the broader, generalist firms. However, the larger strategy firms, as they have expanded their lines of business, have become more difficult to distinguish from the generalist firms. Examples of firms that have traditionally been regarded as strategy firms include the Boston Consulting Group, AT Kearney and Bain & Company.
Specialty Consulting Practice Areas. This segment is by far the most difficult to define, for it encompasses so many different possible practice areas. Specialty consulting firms are often boutiques or small to medium size organizations that service a niche in the consulting market.
Marketing Consulting Firms. These firms provide marketing research, product test markets, target market selection, and other services directly related to the marketing of client products or services.
Business Re-engineering/Organizational Effectiveness. This specialty in management consulting refers to the radical redesigning and rebuilding of the processes and functions of a business to recreate the company as a highly effective, cohesive whole that performs optimally.
Classifying companies by the country of origin they could be directed to the one of two types of companies:
-
major Russian consulting company (100 or more people);
-
Western consulting companies with a large number of employees (their representations in Russia differ in magnitude).
Consulting companies in Russia differ by type of the customer. Depending on niche in the market there are three different types of consulting firms:
1. Companies that specialize in solving problems of several large clients (typically natural monopolies).
2. Firms created by large institutions to solve their internal problems and working on several corporate clients (for example, the company Sibintek originally pursued the full range of IT-support for YUKOS).
3. Independent private firms operating in a competitive market and interacting with numerous small and medium businesses, usually on an ad hoc basis.
Consulting companies differ by specialization. Analysis of the services produced by CFIN of the 40 largest management consulting firms, gave the following results 34:
• 31% - consulting services for the management of operations and processes, including reorganization of the business and total quality management (TQM),
• 17% - advising on corporate strategy,
• 17% - consulting on information technology strategy,
• 16% - advising on business development,
• 11% - advising on organizational design,
• 6% - financial consulting,
• 2% - services for marketing and sales.
All these results are presented in the form of a histogram in Figure 8:
Figure 8. Analysis of the consulting services
The analysis provides consulting services in various areas of activity follows35 (see Figure 9):
• 22% - orders from enterprises of the financial sector,
• 11% - from manufacturers of consumer goods,
• 11% - from other industries,
• 10% - from the companies of telecommunications,
• 9% - from the energy sector,
• 9% - from government agencies,
• 9% - from health care facilities,
• 8% - from research institutions,
• 3% - from the media and business show business,
• 2% - from wholesale and retail trade,
• 6% - from other sources.
Figure 9. Consulting services generated by industries