Management consultants find their market wilting

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)