Oscar Wilde was known to suggest that he only had one use for advice: to pass it on to someone else. We don’t know if he meant tips from his consulting editors.
Even today, however, well-informed advice is a precious asset for the lesser mortals of today. People in business and organizations worldwide are now dependent on expert consultants’ wise advice for their survival and development.
Corporations don’t mind paying between $200 and $500 an hour for the insights that these seasoned, competent, and creative practitioners deliver. But consulting as a profession or a formal company was not officially developed until the late nineteenth century.
The biblical kings had prophets. The Greeks had their oracles; Mauryan Emperor Chandragupta had Chanakya, and Akbar had Birbal. And the mafia had its own consigliere. Consulting, however, took formal form only around the Industrial Revolution.
The first known consulting firm was founded in 1890 by Arthur D. Little and specialized in technology. In 1898, Coopers and Lybrand (now PricewaterhouseCoopers), one of the top consulting firms today, was known as accounting consultants. In the year of 1914, Booz Allen Hamilton became the first ever management firm to engage both administration and the trade bodies.
The very same year, 1914, Arthur A. Anderson founded an accounting firm, which later turned to be among the top management consulting firms, which once employed the largest consultants. It was pulled down by the Enron debacle. Yet its consultancy division (now Accenture) had been overturned before the implosion had occurred.
In 1926, James O. McKinsey founded McKinsey and Company, the first exclusive management and strategy consultancy, that even today maintains its status as one of the world’s best consulting firms.
After McKinsey died at the age of 48 in 1937, his partner, Marvin Bower, managed the company and turned it into one of Americas’ top management consulting firms. Bower improved the professional standing of the consultants by requiring that they use the required business language; it was he who initiated the practice of recruiting business-school graduates instead of existing management consultants.
Top management consulting firms played a major role during the Great Depression of the 1930s when firms sought their wisdom to put their problems behind them. Good days came again for consultants at the end of the Second World War when they were luckily remembered for their wartime assistance to the government.
Near the end of the Cold War, as companies started searching for prospects internationally, they sought top consulting firms’ support to do well in the new market. The techniques built by these top consulting firms have found their way to the curriculum of the world’s top business schools. The new MBAs reimbursed them back when they began their careers and increased the hierarchy: they brought in more consultants.
Consulting firms have had to face two big setbacks since 2000—the dotcom crash (2000-02), when high-tech and dotcom corporations were forced to exit, and the credit crisis (2009-11), when most Western governments, heavily indebted for trying to fund financial firms out of trouble, were forced to reduce their reliance on consultants.
They’ve recovered, but not fully. The rate of growth in the US has yet to pick up, the Arab countries are still just recovering from the decline in oil prices, and the Chinese story has taken a dark spin. Though, Indonesia, Singapore, Taiwan, and South Korea seem to be doing well enough to recruit consultants for various projects.
Despite its predicaments, the consultancy industry created almost $415 billion worldwide in revenues from all consulting forms, including management and strategy consulting, information technology, other technological and scientific fields, and human resources, in 2014. The US accounted for around $191 billion of this.
Accounting services rendered an additional $152 billion in the same year in that region. According to Plunkett Research, global consultancy revenues will soon be around $449 billion. India’s consultancy and outsourcing sector, together, had revenues of $89 billion in 2014.
Today, many of the older top management consulting firms are still thriving, mostly offering management and strategy guidance, new and smart groups, and independent consultants. The best consulting firms now provide detailed road maps for general business, information technology, accounting, marketing, and a host of other functions.
However, even the top consulting company/companies also face tougher and more demanding clients who rely on evidence of their success in their activities and bottom line. Instead of leaving town after receiving especially bulky reports, they remain on and enact their recommendations. Not only that, but they are also now able to become partners in companies that they are sure will have changed.
Academics and business experts categorize the best consulting firms and consultants as:
The industry elite advises the top management of mega-companies on corporate strategies, including Arthur D. Little, A. T. Kearney; Bain and Co; Booz-Allen and Hamilton; Boston Advisory Group; Mercer Management Consulting; and Monitor and Co.
The Big Four also provides strategic guidance and concentrates on execution, especially in the case of their IT clients. They are popular for being some of the best consulting companies. The top consulting firms under the Big Four consists of Deloitte Consulting, Ernst and Young, KPMG, and Pricewaterhouse Coopers.
Top consulting firms that are categorized as boutique firms focus and specialize in specific fields of consultancy. Instances of such comapnies are Oliver Wyman (financial services), Gartner (research), MarketBridge (sales), and APM (healthcare).
IT specialists offer to prepare and implement projects associated with computer systems, telecommunications, and the Internet. Some of the top consulting firms for IT specializations are IBM and Accenture.
Independents are professional business management specialists who are recruited for their unique functional and experiential talent. As a replacement for hanging up their boots, they hang up their shingles, quite lucrative. After gaining exceptional experience, many executives use their resources to support businesses and independent companies and make up for about 45 percent of all top consulting firms, generally working in their establishments.
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