Management consultants find their market wilting
JAKARTA (JP): Local management consultancies are suffering a sharp downturn in revenue because businesses have phased out their usual spending on their services in the crisis, a top industry executive has said.
The chairman of the Indonesian Institute of Management Consultants (IKMI), Heru Sutojo, said on Saturday that business for the local consultants had dropped by more than 30 percent since the crisis began in the middle of last year.
"Only those which have captive markets can survive -- many have already collapsed," Heru told The Jakarta Post.
The crisis, in which the rupiah has lost 75 percent of its value against the American dollar since August last year, has crippled many companies and saddled them with burdensome financial problems.
Troubled businesses, especially those with high-import components such as the textile and shoe industries, could no longer afford management consultant services, he said.
"Companies which normally hired us to conduct training programs, for example, now must undertake stringent cost-cutting measures."
The limited markets in which contracts could still be found are in sectors where the top foreign consultancies would likely win selection, he said.
These include projects sponsored by the government, such as banking sector restructuring and privatization of the state-owned enterprises, he said.
The government holds slight confidence in the performance of local consultants, he added, which accounted for it hiring prominent foreign consultants which "cost 10 times more".
"The government seems to trust top foreign consultants more than the local ones to carry out the jobs."
Local consultants were tainted by perceptions they were unethical in the execution of their tasks and susceptible to graft practices, he said.
Little chance
Walter Vieira, the chairman of the International Council of Management Consulting Institutes (ICMCI), acknowledged that consultants might have little chance of flourishing in the crisis because businesses could not afford to hire them.
"Unfortunately, those who need consulting the most can afford it the least," the India-based Vieira said on Saturday during his visit here.
Demands were big when companies were growing, while the turmoil had made it impossible for firms to expand now, he said. Indonesia's economy is expected to contract by 15 percent this year.
Corporations which could still afford consultancy services tended to opt for the world's top consultants, he said.
Out of about $60 billion generated yearly in the consultancy management businesses worldwide, 60 percent is absorbed by the 50 largest firms, including Arthur Andersen, Price Waterhouse and Ernst & Young, he said.
He attributed this to the lack of certification of most management consultants, including in Indonesia.
"Right now, an Indonesian cannot get a project in countries such as Canada where consultants are required to be certified by ICMCI."
The lack of standardization had also caused serious credibility problems to the profession due to self-styled charlatans.
"Everybody who is retired, jobless or in between work calls themselves consultants. They do bad jobs and give a bad name to consultancy."
ICMCI aims to ensure that all of its 28-member countries will be able to issue certification to their members to provide global standardization of the profession, he said. Certified members are obliged to abide by ICMCI rules and its code of ethics.
Vieira said ICMCI represents 85,000 members, about 10 percent of the legitimate global consultants.
IKMI, which groups 30 members, estimated there may be 10,000 management consultants in Indonesia. (das)