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“Rethinking
Consulting”
Issues and Challenges arising from changes
in its scenario of action
Report on the consulting market prepared by
FEPAC – PANAMERICAN FEDERATION OF CONSULTANTS
ABCE – Associação Brasileira de Consultores
de Engenharia
(Brazilian Association of Engineering Consultants)
FINEP – Financiadora de Estudos
e Projetos
1997-98
Preliminary Views of the Consulting
Companies
1. Status of the segment
The dramatic shrinkage of the public investments
and the deregulation and concessions policies triggered an
unexpected crisis in the consulting segment
The enforced demobilization of the technical
personnel due to the downsizing of the public investments
is negatively impacting the technical capacity of the companies
The discontinuity of the market is leading
the companies to outsourcing and to reduce their permanent
technical staff
The opening up of the market happens while
the national companies in some countries are fragile.
2. New scenarios
The scenarios of action of the Consulting
activities are changing in the long run
The change will not be radical: the private
companies are becoming important clients but the government
will continue to contract
The transition should be slow
Competition in the open market demands high
level of investments in technological capacity and new management
models
Consulting activities are barely known in
the new scenarios
Private companies are poorly informed about
the capabilities of consulting due to its low profile
Consulting is not familiar with actions of
marketing”
3. The identified trends
Before:
Top-down and enlarged structure, self-sufficient
companies in their area of action, working separately in the
market.
Now:
Regular associations of companies with nuclear
structure, complementing one another, increasingly using outsourcing
Before:
Independent companies focused to the owner
decisions, with hardly any connection with
other organizations
Now
Alliances, joint-ventures with constructors
and industrial engineering groups in turn-key contracts and
privatization and concessions of public services
Before:
Action in the market as a passive agent responding
to client’s invitations to submit technical and commercial
proposals
Now:
Action in the market as an active agent, driving
investments, sponsoring the formation of business groups and
association of companies from distinct segments to do business
with or without sharing risks and benefits
Before:
Predominantly service companies doing business
with government-owned companies, based in technical and commercial
capacity through public bids
Now:
Service companies increasingly doing businesses
with private-owned groups through marketing and commercial
negotiations to the market rules
Before:
Local companies working in captive markets
and privileges to national-owned groups
Now:
Groups doing business in an open market, without
privileges to the national-owned companies, frequently in
association with foreign companies and extended exchange of
technologies
4. Challenges to the Consulting companies
Adopt new models of organization and management
Prepare to incorporate new forms of association
in and out of sectors to act in national and
international markets
Develop new market practices
Prepare to pursue and act in new areas of
action:
- privatizations and concessions
- quality management system
- institutional modernization
Take advantage of the new opportunities in
the international market
Improve its capacity for optimized performance
in the traditional markets
5. Proposal of Institutional Action
Run a market research
to envision new scenarios opening up for Consulting
Sponsor the actions recommended by the research
The Research
Goals:
Bring information about the Consulting market
Evaluate the image the actual and potential
clients have about Consulting
To gather data for:
Marketing strategies for Consulting
Restructuring of the segment and of the companies
within the new scenarios
Main aspects approached with the interviewed:
I. Market.
Actual view of the economic condition of its
country
Privatizations and concessions: advantages
and risks
Evaluation of the future investments in infrastructure
II. Image of Consulting
Quality of the services
Qualification of the technical personnel
Technological learning
Commercial relations
Consulting own characteristics
III. Challenges
New areas of action
The role of Consulting in the new scenarios
Potential competitors
Trends of the Consulting market
IV. Marketing
Reading habits of the interviewed
Forms of communication with the market
Profile of the interviewed:
Federal, State and Municipal government
National and Foreign Business Groups
National and Foreign Investors
Areas of Action of the Interviewed:
Power
Telecommunications
Transports
Sanitation
Mining
Oil/Petrochemicals
Outcomes
1. Understanding of the economic situation
Overall acceptance of the neo-liberal model
and globalization
Valorization of the competitive participation
into a globalized market
Continuous pursue of productivity
Expectations of growth of the national economies
Few critics to the economic model
2. Level of conviction of the interviewed:
The acceptance of the model with suspicion
or uncertainties
Strong adherence as to advantages of the neo-liberal
model
Active promotion of the model due to direct
economic interest
Opinions about the economic model
1. Positive aspects:
The globalization is inevitable and irreversible
The competition leads to the improvement of
the quality and price downing
Opportunities of new businesses rise
Foreign capitals are drawn to the country
2. Negative aspects:
Increases the level of unemployment
Shutting down of companies that don’t
fit in the scenario
3. The role of the State in the neo-liberal
model:
Shrinkage of the State share in the economy
Focus in the basic social activities
Ruling role of areas of action of private
groups:
- power, telecommunications, oil, transports,
hydro resources
Loss of investment capacity led to Privatization
Actual advantages of private-state associations
in concessions
Agility of the private segment versus inefficiency
of the state
Perspectives of investments
1. Main Areas:
Telephone / Telecommunications
Transports: road-railways-air-river
Power: electricity/gas/oil
Water and sanitation
Tourism
2. Required conditions:
Clear rules and statutory norms
Stable tax policy
Realistic concession term
Political and economic stability
3. Consulting in privatizations and
concessions
Limited use of Consulting by the private investor
Required use of Consulting in the supervision
of concessions
Image that the private client has about Consulting
Sector in process of restructuring
Downsizing of personnel and outsourcing
Sensible reduction of the market
Qualitative loss of technical staff
More positive image in the past
Though positive image, not
prepared to face the new demands
Slow absorption of the new rules of the market
Fragile to face international competition
Criteria of the private client to
select the consultant company:
Creativity: new modalities of work
Expertise
Resume of the company and its technical staff
Prior demonstration of steering capacity
Personal knowledge or presentations
Domain of advanced technologies
Solidity of the company
Costs: an important factor – not decisive
Challenges:
Capability training to meet new and increasing
demands
Change of position: from passive waiting for
invitation to pro-active pursue of businesses
Agility and aggressiveness when receiving
clients
Association with investors and business risks
sharing
Formation and coordination of groups/consortiums
for potential businesses/concessions
Training for overall management of big investments
Expertise/excellence in specific areas
Ability to reduce execution schedules of reports
and projects – a expertise highly valued by the private
segment
Raise of the economic capacity of the company
or group through associations/merges
Associations with foreign companies: complementation
and transference of technology with better knowledge of the
local market
Improved capacity to render services in the
traditional market: the public investments continue in important
segments
Some additional topics for a strategic planning
Capability of the Company to
participate
integrate
lead
make possible
groups/consortiums in privatization and concessions
programs
Training to prepare “project finance”
to promote businesses
Modalities:
BOOT/BTO/BOO/BBO/LDO
Promotion of strategic alliances between companies
national-national
national-foreign
consultant-contractor
Mutual benefits of the alliances:
size/management capacity growth
use of advanced technologies
improved knowledge of the local conditions
more competitive costs
More efficient actions of “marketing”
- Institutional (Associations)
- Commercial (Companies).
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