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So, You Want To Be A Consultant?

Industry Overview

So, you want to be a consultant? Or, more likely, you think you'll spend a few years as one and then move on to other things. You're not alone-there are more than 250,000 consultants in the U.S. Consulting firms are traditionally among the largest employers of top MBA and college graduates, and they are an attractive alternative career option for people who've toiled in industry for a number of years.

Consulting is a high-paying, high-profile field that offers you the opportunity to take on a large degree of responsibility right out of school and quickly learn a great deal about the business world. It's also a profession that will send you to the far corners of the country-and leave you there for days and weeks on end while you sort out tough questions for a client that's paying your firm millions of dollars.

In essence, consultants are hired advisors to corporations. They tackle a wide variety of business problems and provide solutions for their clients. Depending on the size and chosen strategy of the firm, these problems can be as straightforward as researching a new market, as technically challenging as designing and coding a large manufacturing control system, as sensitive as providing outplacement services for the HR department, or as sophisticated as totally rethinking the client's organization and strategy.

Management consultants must be skilled at conducting research and analyzing it. Research means collecting raw data from a variety of sources including the client's computers, trade associations in the client's industry, government agencies, and, perhaps most importantly, surveys and market studies that you devise and implement yourself. It also means interviewing people to gather anecdotal information and expert opinion. The interviewees may be anyone, from industry experts to the client's top executives to the client's lowest-level employees. All this data must then be analyzed, using tools from spreadsheets to your own brain. The idea here is to spot behavior patterns, production bottlenecks, market movements, and other trends and conditions that affect a client's business.

Your ultimate job is to improve the client's business by effecting changes in response to your analysis. That's the hard part, because it involves convincing the client to accept your recommendations, often in the face of opposition from client executives who resent outsiders upstaging them with the boss or resistance from company employees who have something to lose from change. To succeed you'll need excellent people skills and the ability to put together a persuasive PowerPoint presentation. Finally, you'll need the ability to handle disappointment if your solution fails or the client decides not to even try implementing it.

One good thing about the advice business: Companies always seem to want more. As evidence, the consulting industry has been on a sustained growth binge for well more than a decade. One other thing about the consulting business: The product really is the people, and firms compete on the basis of who's the smartest and the hardest working. As a result, each firm wants to hire the best and the brightest. If you're one of them-you probably know if you are-you'll have a good shot at landing one of these competitive jobs.

Bad Times in Consulting
The weak economy and the falling stock market, as well as the terrorist attacks of September 11, 2001, combined to hit Corporate America hard. In response, corporations got ruthless about cutting nonessential costs. Guess what's high on the list of nonessential costs for many companies? Right: consulting engagements. In addition, with companies spending less on IT systems, the industry no longer makes out like a bandit on implementation projects like it did in the 1990s; demand for IT consulting fell by 6 percent in 2001. As a result, layoffs have hit just about every consulting firm you can think of, large numbers of smaller concerns have gone under, and those who have managed to keep their jobs often no longer enjoy the kinds of perks they enjoyed just a few years back.

The End of E-Consulting?
A couple of years ago, e-business boutique firms such as marchFIRST (now out of business) were on top of the consulting game. Clients needed to go digital, and industry giants like Deloitte Consulting scrambled to keep up with novice Internet firms and their 30-year-old CEOs. But in today's environment, the e-consulting business has lost substantial steam. The question is, will it survive at all?

Some signs look pretty grim. Internet consulting firms lost the bulk of their clientele to the dot com decline, and firms across the industry have suffered through substantial layoffs and plummeting stock prices-that is, if they've managed to stay in business at all.

For most consulting firms, e-consulting opportunities still exist, but they've greatly declined. With less funding and a tougher economy, many surviving Internet start-ups can't afford to purchase consulting services. And old-economy companies looking at expanding their Web presence are warier than they might have been a couple of years ago about laying out wads of cash to consulting firms to do so. All this spells hard times for e-consultants.

Recruiting Drought
It's another down year for consulting recruiting. Many consulting firms don't have enough business to keep their existing staff busy, so, in addition to laying off employees, they're cutting back on the number of new recruits they're looking to bring onboard. Look for consulting firms to have considerably fewer offers to make on campus this year-and look for some firms that have recruited on campus in the past to skip your school altogether.

Consulting, or Outsourcing?
When is someone who's called a consultant and employed by a consulting firm not actually a consultant? Traditionally, consulting firms offered client companies business advice. In the 1990s, many firms moved away from advice and towards system implementation-in which, in addition to advice, the consultants helped install new systems and integrate them with clients' existing systems. Now consulting firms are moving even further away from the traditional definition by relying increasingly on outsourcing for revenues. This model sees consulting firms taking on specific business functions like IT and HR for client companies. Firms like Accenture, Cap Gemini Ernst & Young, and IBM are seeing major growth in these offerings.

Even though there are thousands of consulting organizations across the country, these firms can be tough to get a handle on. Why? Most are privately held, work directly with other businesses rather than with your average consumer, and tend to be intensely private about the names of the clients they work with and the actual work they do. Nevertheless, if you want to get a job in the industry, you're going to have to know which firms do what and be able to say in clear and convincing terms why French vanilla is oh-so-much-better than vanilla with little specks of vanilla bean sprinkled throughout.

To help you understand the consulting landscape, we've divided the industry into six different categories: the industry elite, the Big Five, boutiques, information technology (IT) consultancies, human resources specialists, and the independents. Most players in the industry can be put into one or more of these different categories.

Industry Elite
The rich and famous of the consulting world. These companies focus on providing cutting-edge strategy and operations advice to the top management of large corporations. They generally hire the best candidates from the best undergraduate, MBA, and other graduate programs. Slackers need not apply. Players in this group include: A.T. Kearney, Bain & Co., Booz Allen Hamilton, the Boston Consulting Group, McKinsey & Co., Mercer Management Consulting, and Monitor Group, to name a few.

Big Five
These were the consulting operations of the Big Five accounting firms, all of which-except for Deloitte Consulting-were spun off and/or sold over the past couple of years. Although these firms provide some of the same strategy and operations advice as the elite, they tend to put a stronger emphasis on implementation work, particularly in the IT world. The players are Accenture, Deloitte Consulting, Cap Gemini Ernst & Young, BearingPoint (formerly KPMG Consulting), and IBM Business Consulting Services (formerly PricewaterhouseCoopers Consulting). (And, until recently, [Arthur] Andersen.) Four of the Big Five (now referred to as the Big Four with the demise of Andersen) got out of the consulting business, partly because of SEC concerns over possible conflicts of interest, which have led to overly rosy audits of firms that are consulting clients of the accounting firm performing the audit. This was an issue in Andersen's dealings with Enron.

Boutique
Firms that specialize along industry or functional lines. Although often smaller, these firms may have top reputations and do the same operations and strategy work the elite firms do, but with more of an industry focus. Representative players include: Advisory Board Company and APM (health care); Corporate Executive Board (cross-company research); Marakon Associates (strategy), Oliver Wyman (financial services); MarketBridge, formerly Oxford Associates (sales); PRTM (high-tech operations); Strategic Decisions Group (decision analysis), Roland Berger Strategy Consultants(strategy and operations); Braun Consulting, formerly Vertex Partners (strategy).

IT
Although Internet consulting firms have suffered in the past year and a half, information technology specialists can still find jobs in the consulting world. The technology practices of the Big Five and Big Five-related firms (Accenture, Deloitte Consulting, Cap Gemini Ernst & Young, BearingPoint, and IBM Consulting Services) have slowed but not disappeared, and tech giants such as IBM have snatched up struggling e-consultancies (Mainspring in this case), not to mention one of the Big Five (Pwc Consulting was gobbled up by IBM in 2002). IT consulting focuses on providing advice, implementation, and programming work on issues related to computer systems, telecommunications, and the Internet. Representative players include American Management Systems, Computer Sciences Corp., DiamondCluster, EDS, and the current and former Big Five-related firms.

Human Resources
This area of consulting focuses on personnel issues such as employee management and evaluation systems, payroll and compensation programs, pensions, and other benefits programs. Representative firms include The Hay Group, Hewitt Associates, William M. Mercer, Sibson & Co., Towers Perrin, and Watson Wyatt Worldwide. In addition, several of the Big Five firms have practices devoted to this area.

Independents
One-man or one-woman shops. By sheer numbers, independent consultants far outnumber the larger firms-fully 45 percent of all consultants are reported to be independents. They typically have some sort of industry or functional specialty and get hired on a project basis. If you have an MBA and several years of useful and topical business experience, there's no reason not to hang out a shingle yourself.

Consulting is not the kind of industry where work is steady, despite the unusually lengthy period of job growth throughout the '90s. The downturn in the economy that hit when the Internet bubble burst left consulting firms bigger than ever and stranded on the beach-this is consulting speak for any period of time during which a consultant is not staffed on a project. After years of heady growth, revenues in the consulting industry were flat in 2001, with some firms rescinding offers and others postponing start dates. As long as the economy remains uncertain, so will the recruiting outlook.

However, firms indicate they still plan on hiring undergrads, MBAs, and experienced consultants in 2002 and 2003. But getting an offer won't be easy. Expect competition to be fiercer than ever as the best and brightest, and everyone in between, clamber for open positions. Those with flexibility have the best chances. While IT consulting has stepped to the sidelines, emerging industries such as biotechnology and mobile commerce are replenishing firms' portfolios. As these fields grow, positions for non-MBAs, particularly those with a science background, may become more in demand.

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