Adaptability Is the Way Forward

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The numbers are striking. Statistics from the European Federation of Management Consultancies Associations show that in the 1990s, the Slovenian management consulting industry had an average growth rate of 13% a year. 2005, the year following EU membership, saw an additional 9% growth, generating a EUR120 million profit for that year. 2007 saw the industry grow by a whopping 19,5%, and in 2008 the trend continued with 17% growth.


A different ball game

2009. Recession. And with it unforseen challenges for consultancy companies across the globe. Slovenia was no exception: the fact that in 2009 the consultancy sector is expected to have grown by 1-3% following years of double-digit growth speaks for itself. But even though it’s been modest, there has been growth. How has it been achieved?


Driving factor

The answer can be summed up in one word: adaptability. With the market as a whole changing, consultancy agencies had to change with it. Mr Janko Arah, head of Arah Consultancy in Ljubljana, points out that in the recession period there were more company liquidations than startups, and more terminations of employment relations than new employment. So the challenge for consulting companies was to adjust its activities to the new market demand.

Deloitte, a global consultancy firm with offices in Slovenia, noticed similar changes. They describe «a significant increase in requests for risk management, human capital, fraud protection, and strategy realigniment« during the economic downturn. «Overall we have seen a significant trend toward the public sector, an increase in competition for tenders, and a realignment of pricing“, a spokesperson added.


Self-analysis

This fall and change in demand has brought about an unexpected benefit, industry insiders say: a fundamental re-think of the sector from within the sector itself. Most agree this has been crucial given that the finger of blame for the recession has often been pointed at the consultancy industry.

«Recession is not a Slovenian phenomenon – it is a global problem with global and local roots«, said Mr Arach. «In my opinion, very ‘innovative’ consultants who have advised bank managers, insurance companies and other American or global players contributed to the economic downturn by promoting and supporting unrealistic business decisions.«


Strategic position

There is no doubt that the recession has posed challenges for business. But by being flexible and adaptable, it’s a challenge which many companies have managed to meet – consultancy firms included. Slovenian consultancy firms believe that they are in a better position to emerge from the crisis stronger than in some other European countries, such as Portugal. They belive their strength lies in their good market position and prospective foreign markets such as southeast Europe.

Mr Peter Kraljič, of McKinsey consulting group, predicts that the growth of consultancy firms is far from over. «The demand for consulting services will grow in line with overall economic and industry growth,« he says »yet probably also with increasing regional differences, reflecting growing yet different needs.«