Intelligent Globalisation: Change of direction for Management Consultancy

The world of Interim Management continues to evolve, but so does its close allies in Management Consultancy, I was interested in this article earlier in the week which challenges the traditional model and perhaps opens up more opportunity for strategically orientated Interim Managers. What do you think?

World domination by tiny teams that span the globe-Clare Gascoigne explains how rapid technological change has made virtual consulting a reality.....

In today's global village your co-workers are as likely to be sitting thousands of miles away as at the next desk. Technology has broken down physical barriers and with an increasing variety of consultancy services going offshore, a new way of working is developing. Welcome to the virtual team.

"We are starting to see more intelligent globalisation going on", says Fiona Czerniawska of the Management Consultancies Association."The consulting process is being broken up: putting in a new IT system, for example, might mean talking to the client onshore, designing and building the system offshore, testing it both on and offshore, and moving onshore for training. That creates a lot of issues."

Paul Morrison, managing consultant at Alsbridge, says: "Many consultancies have been local businesses, perhaps with a global presence but not well integrated. Now, the business itself is offshoring functions such as IT, finance or human resources."

"Our data predicts further growth in the value of work being moved offshore" says Duncan Aitchison, partner at TPI, a sourcing advisory firm. "The approach of many companies to outsourcing has matured to the extent that it is now no longer a question of whether to offshore, but rather which elements and to what degree."

Offshoring is driven partly by cost; salaries are cheaper in eastern Europe, albeit a price differential that may be eroded in time. But it also reflects the need for 24/7 working, allowing a firm to complete a project more quickly.

Different countries are also developing different skills, says Czerniawska. "We could end up with clusters of specialist consultants in different countries," she adds. "It is the modern equivalent of the division of labour."

That process can already be seen in operation. India (which won 5.2% of offshore contracts compared with 3% in 2005, according to TPI) developed an expertise in IT that encouraged the development of education and training, which in turn attracted more people to work in IT - a virtuous circle that results in India becoming the dominant player in IT or business process outsourcing.

That may lead to a reverse offshoring, in which Indian consultants are brought to the UK to provide expertise or training - a mix-and-match solution that increasingly blurs the line between on-, off- and near-shoring. "People are now much more sophisticated about dividing up their work," says Czerniawska.

The trend towards different countries providing different skill sets could pose a problem for the management consultancy industry, warns Morrison.

Traditionally, management consultants in the UK cut their teeth on analytical, number-crunching work before moving on to strategic consultancy. Now, much of the analytical work is being offshored to other parts of the world, providing cost and efficiency benefits for UK consultancies but potentially changing the career path of their employees.

"It is a question for the whole industry," he says, "more and more analytical resources are going offshore, what does that mean for the traditional model?"

Thank you to Times Online for the inspiration behind this article