Guiding companies to succeed in borderless market

I. Christianto Contributor Jakarta

The trade globalization trend has seemingly turned the world into one single market with a product from one place to other parts of the world flowing freely without going through significant barriers.

Despite offering growing business opportunities, the expanded market has, however, posed a fiercer competition to business players.

In such a situation, having a good product is no longer enough. A company should also be backed with a good marketing strategy, skillful human resources and reliable technology. Otherwise they will become the losers.

In facing such a difficult situation, internal resources are no longer sufficient in making a company more competitive and more efficient and more profitable. This is why many companies have turned to consulting companies to help them ride the borderless business world.

Consulting firms offer a wide range of services to help their clients. The advice includes internal organizational development, restructuring, skill training, human resources, IT development and problem solving.

In more macro fields, the consulting firms also provide advice to reduce risks resulting from political uncertainty or in facing the global competition.

Many consulting companies also offer advice on specific issues such as in helping corporate clients to avoid bankruptcy, debt restructuring, capital optimizing plan, product development, recruiting qualified staff and investigating business rivals.

Consulting companies' executives acknowledge that the demand for consulting services has been growing rapidly in recent years as many companies, either small or large, have realized that being smart is one of the key factors in achieving their business goals.

The fact that seeking assistance from professionals would enable them to significantly cut costs rather than if they hired special personnel to carry out the job.

"This is one of the reasons why the consulting business is growing," says Yanti Munthe, a consultant of PT AchieveGlobal Indonesia (AGI).

In many aspects, outsourcing is cheaper and better for the clients. Besides, the length of the works could be reduced to as minimal as possible, the works of professional consultants will be more accountable especially to those which require transparency and impartiality.

A marketing executive of PT Magnus Indonesia, Rizky Sewaka, says orders for consulting services had not only came from large business companies but also from small and medium- sized businesses.

Although the scope of consulting services given to such companies are much smaller either in terms of value or volume, their presence has had a significant impact on the country's consulting business.

"The trend is very encouraging. This has also encouraged consulting firms to prepare and arrange special consulting packages suitable for small and medium companies," he adds.

The more diversified demands has also led to the creation of several market segments for consultants. Many consultants offer various consulting services ranging from formulating a marketing strategy to massive corporate restructuring. Some others provide research services.

Good consultants are those who are able to help uncover new strengths and potential. They usually carry out diagnostic approaches in order to give their clients a clear picture of the company's operation and organization.

"The clients need our service because we help them to formulate a strategy that will enable them to achieve their business goals," Yanti says.

In addition, with the help of professional consultants, clients will be able to apply the best business practices commonly found in the business world.

AGI provides human resources consulting services including training in the area of service excellence, sales performance, leadership and organizational effectiveness, assessment and cross-cultural effectiveness.

AGI, located on Jl. Gatot Subroto, serves its clients in performance, results-oriented training and human resources development, she added.

"Our clients come from the banking sector, consumer goods, survey and research, oil and gas, heavy industry and IT."

AGI is part of the Florida-based AchieveGlobal, a leading consulting group that specializes in helping clients to, among other things, clarify business strategies and transform strategy into implementation plans.

"The most-wanted services sought by my clients are the expertise in bringing the method, building capacity, implementing the program and keeping the skill alive. The current trend is in the area of sales competency and organizational effectiveness," Yanti says, adding that most clients seek help because they lack the experts to accelerate the process.

According to her, AGI serves approximately 250 clients yearly, while fees would depend on the scale of the projects. Clients are mostly multi-national companies (MNCs) and some local large companies.

"We are small but efficient. Our consultants are postgraduates and have been assigned in management positions prior to their current assignments.

"The number of our consultants in Indonesia at the moment is five. However, since we operate in 70 countries, if needed, we can seek help from other regional and head offices," she says.

Unlike AGI, Mignus Indonesia specializes in IT-based services.

"Magnus Indonesia, affiliated with the Holland-based Magnus, helps clients improve their business performance through IT consulting, systems integration, implementation and systems management," he says.

Magnus Indonesia, founded in 1996, also offers a full range of services and has a dedicated in house software design and development department.

"We offer Enterprise Resource Planning (ERP) which is adaptable based on the business and system applied by each client," he says.

There are dozens of international consultancy firms operating in Indonesia. The number of local consultants has also grown.

Each consulting company has a different tariff in charging their clients. But they most charge their clients between US$500,000 and $2 million depending on the scale of the works.

The main clients of such big consulting firms are mostly MNCs or large Indonesian business corporations, including state firms and those which have international affiliations.

Business consultancy which covers, for example, privatization, debt restructuring, human resources and organizational development with an average fee of between $2 million and $3 million for each assignment for larger firms. The figure, however, will depend on the "brands", images and reputations of the consultants.

There are usually two types of payments charged by business consulting firms, namely retainer fees and success fee. Retainer fees is a fixed rate negotiated between the firm and client. The fee will be paid on a regular basis such as weekly or monthly, based on the contract. A success fee is usually available per case, for instance when the consultant is successful in clinching an acquisition, merger or take over for the client.

But there are many factors that determine the fee, which depends on the complexity and type of contract. Consultation for strategy is so different from consultation for technology implementation. Other consulting firms will agree to negotiate based on the complexity and period of contract. The fee will also vary according to the deployed consultant, whether she or he is a senior or junior specialist.