Overview

Imagine spending your day giving advice to other people, telling them how to run their businesses better or how to save money on hiring new employees. You’ve spent your years at school or in the workforce acquiring knowledge and now you’re able to sell it for hundreds of dollars an hour. Consulting firms are traditionally among the largest employers of top MBA and college graduates. With various specialties like IT, human resources and business strategy consulting on the growth fast track, if you’ve got the qualifications it’s likely that these firms will hungrily read your resume.

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. But many mid-career professionals, too, decide to take their expertise to consulting firms or hang out their own shingle and begin selling what they know. Most consultants specialize in a particular field, and if you have a big career coup that you can tout—such as having success at a big company, or launching a high-profile product or initiative—that’s exactly the kind of calling card you can take advantage of to get clients.

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.

Consulting is a big, one-size-fits-all term that includes virtually any form of advice-giving. Many people think first of management consulting, also called strategy consulting, which specializes in providing advice about strategic and core operational issues—but there are many other types of consulting, including marketing consulting, technology consulting, human resources consulting, just to name a few.

Trends

IT is H-O-T
At an estimated $14 billion in size, and with a compound annual growth rate projected at 8.8% through 2009, the IT Strategy and Planning (ITSP) consulting market is healthier than it’s been since the crazy days of the dotcom boom. Consulting research firm Kennedy Information, publishers of Consultants News, says that there are three key reasons for the growth: The technology marketplace is maturing, with identifiable key players; competition is forcing companies to make better use of technology to be more efficient; and complex IT systems require companies to seek outside help.

The Challenge to Outsourcing
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.

Firms are Cashing In
As more companies realize that it’s easier to hire someone who knows what he or she is doing to fix a problem rather than fumble along in the dark, consulting firms are getting more profitable. Kennedy Information reports that consulting fee levels are expected to increase by 5 percent in 2007. This is a welcome contrast to rampant fee discounting and lackluster profitability growth over the last several years. This increased profitability not only means higher fees to clients, but also more competition between firms for the best clients.

How It Breaks Down

These days, it seems like just about everybody and her brother professes to be a consultant. "Hold on," you say. "How can Aunt Suzie, who has her own consulting business, and those people in the blue suits at the famous New York addresses all be doing the same thing?" All of them may really be consultants, but you can bet they’re not all doing the same thing. Just as there are many different sorts of doctors, there are consultants with all manners of expertise and specialty.

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. Keep in mind, however, that such groupings are arbitrary. Firms in one group can and do compete directly with players in other segments.

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, Booz Allen Hamilton, The Boston Consulting Group, Marakon Associates, Mercer Management Consulting, McKinsey, and Monitor Group.

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 (high tech research), and PRTM (high tech operations).

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.

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’s Change Management Group, Buck Consultants, Hay Group, Hewitt Associates, Mercer Human Resource Consulting, Towers Perrin, and Watson Wyatt.