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| | firm hiring activity in
recent years, these
translate into a dearth
of talent at particular
experience levels where
that vintage of
consultant was
particularly rare.
There are
limited ways of
increasing the sources
of supply within firms
While firms are
becoming more inventive
at finding ways to free
up extra consulting
capacity – by
encouraging mothers back
from maternity leave or
buying holiday from
employees – ultimately
these have no more than
a cosmetic effect on the
total quantity of
consulting talent
available.
...and
alternative sources of
consulting talent are
harder to tap
In the current
market, in which
specific sector
experience is being
demanded, consulting
firms are also looking
to take on experienced
industry hires – but
again the number that
can meet the high client
delivery standards is
also limited, making the
right industry hires
very hard to find. Added
to this, many of the
largest consulting
clients have grown their
internal capabilities,
meaning that individuals
with the right skills
can join the in-house
team of their current
employer, and these
employers appreciate the
need to retain such
talent.
Demand for
consulting talent
The market for most
types of consulting
services remains very
buoyant, meaning that
consulting firms are
enjoying another very
strong year. The drivers
of this strong demand
for consulting services
and hence for
consultants include:
The underlying
macroeconomic
environment remains
highly favourable
This means that many
firms are having a great
2006 with significant
fee income growth and a
very healthy pipeline of
prospects. Many firms | |
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| | are turning client work
away, constrained by
their capacity to
deliver to the standards
clients expect.
The rise of
private equity increases
demand for consulting
and consulting talent
As private equity
continues to grow as an
asset class, so the
demand for consulting
advice in the form of
due diligence projects
and post-acquisition
transformational work
has grown to represent a
significant slice of
most firms' fee income.
This highly lucrative
work is hard to resist
for the consulting firms
but added to strong
demand from their
traditional corporate
clients often leaves
them under-resourced.
Private equity clients
are buying the
consulting firm's
industry expertise
meaning that the firms
need consultants with
prior experience in
particular industries.
On top of that, the
private equity firms are
hiring consultants to
give them an in-house
consulting capability to
deploy on deal execution
and portfolio
management. Private
equity players have
therefore increased the
demand for
externally-purchased
consulting services,
whilst also eroding the
finite supply of
consultants available by
taking a significant
number of them in-house.
Larger
companies have been
growing their in-house
consulting teams
In-house teams have
developed in an attempt
to lower overall
consulting spend and
increase effectiveness
of external consulting
spend. Since the
downturn in the market
in 2002-03, the in-house
teams of large companies
have become increasingly
sophisticated at
tempting consultants out
of their firms with
competitive packages.
Many offer attractive
internal career
progression into line
management and the much
sought after ability to
'be the client' for a
change.
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Some key
sectors have been
driving demand
There has been very
strong growth in a few
key sectors that have
driven the consulting
boom. Fee income in
financial services grew
by 50% during 2005,
while telecoms fee
income grew strongly by
over 40%. The public
sector has continued to
grow as a massive buyer
of consulting services,
but the rate of growth
of public sector fee
income has slowed from
114% in 2003 to 23% in
2005.
Firms are
demanding specific skill
sets from their new
hires because their
clients expect them
In the late 90s’ boom
in consulting, hiring
needs were met simply by
identifying the
high-calibre
individuals. The current
hiring boom presents
more of a challenge for
employers and candidates
given that firms are
demanding some very
specific skills rather
than just 'high-calibre'
individuals. In effect,
the definition of
consulting talent has
been made more specific
as employers have become
increasingly
sophisticated and
demanding in their
recruitment
specifications. Very
specific project and
industry experience is
now being sought as
these skills are in turn
being expected by the
increasingly exacting
standards of consulting
firms' clients.
Conclusions
The current imbalance
of supply of and demand
for consulting talent in
key market segments will
continue to have
significant implications
for recruiters and
consultants alike.
The good news for the
fortunate ones on the
inside of consulting is
that with supply falling
short of demand, growth
in consultant
remuneration has been,
and will continue to be,
very healthy.
Consultants have seen
strong year-on-year real
growth in their earnings
and this looks more than
likely to continue. Many
consultants will take | |
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| | advantage of the strong
market to make a move
into another firm and
gain a promotion at the
same time. Others will
see their current
employer offering
additional sweeteners in
terms of remuneration or
career progression to
retain their talent.
Some may take the
opportunity to join the
rapidly-growing in-house
consulting teams in
companies or private
equity houses.
For those on the
outside of consulting,
the market requires
additional supply and
therefore those wishing
to join consulting from
industry, business
school or elsewhere face
pretty favourable
conditions. However, the
recruiters within the
consulting firms are
still pursuing very high
quality standards and
will therefore look for
more than a keen mind in
their next hires. Those
recruiting are looking
for some very specific
skills, such that many
high quality applicants
will still find
themselves disappointed
if they do not have the
right skills and
experience. The vast
majority of firms quite
rightly prefer to turn
work away and preserve
their reputation for
quality, rather than
lower the bar in their
hiring activities.
For recruiters, the
tactics employed to
attract and retain
appropriate talent will
need to continue
increasing in
sophistication. The
market is not one of a
simple excess of demand
over supply; it involves
a complex game of
finding and matching
very scarce and specific
skills to meet
increasingly
sophisticated client
needs. Finding the right
individuals, with the
right skill set, will
remain a big challenge
for all firms. In
particular, those firms
without the top-tier
brands or remuneration
packages will have to
think creatively about
how they both identify
the right individuals
and create appropriate
incentives for them to
come on board.
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