Foreign investment sparks need for management consultants
Along with big international players, such as Arthur Andersen, KPMG, PricewaterhouseCoopers and Ernst & Young, many local companies have also appeared on the market, giving a potential client no small amount of options.
Despite the proliferation of firms, executives said that the sector is far from being saturated. "I'm not sure I'd call it mature; the market has continued," said Greg Doyle, managing director at KPMG Polska, which has experienced 50-60% growth annually for the past three years.
At the crux of the demand are bloated, unmodernized companies, which are often restructured once a strategic investor comes in or after they are privatized through a public offering. "Certain companies know that they have to change or die," said Aleksander Kwiatkowski, a director within the management consultancy department at PricewaterhouseCoopers.
KPMG is not alone in its 50% a year growth spurt. Arthur Andersen has grown to have approximately 70 people working in management consulting, according to Dariusz Kraszewski, a board member with the firm.
According to the list, Arthur Andersen's net revenue for management consulting has increased by approximately 100% each year since at least 1996. Net revenue in 1998 was zl. 21.2 million ($5.73 million).
In addition to foreign investment and privatization, several other factors are also fueling the demand for consultants. One of them is a need for companies to begin working more like their peers in the European Union (EU), in preparation for when the country joins that economic bloc.
"Polish companies realize that they have to come closer to Western standards of management," said Jean Baron-Mazloumian, a vice president with the Boston Consulting Group.
Information technology, for example, is particularly important because software now exists that can monitor nearly everything, such as budgets and human resources. Installing those kinds of systems, however, typically requires both management consultants and investment.
But foreign investment is still spurring the most demand for consultants. As more foreign direct investment comes to Poland, competition in different sectors heats up and local companies need to change to hold their own.
At the same time, many domestic companies already have influential foreign shareholders, which are pushing them to cut costs, improve efficiency, increase market share and strengthen profit.
While many companies investing in Poland are starting greenfield operations, a substantial number are also buying up existing enterprises. The foreign management then wants to restructure and integrate these businesses into the foreign company's existing structure.
Last August, Arthur Andersen was hired to integrate three plants under one management system owned by cement maker Goraldle, which is currently more than 80% owned by the Belgian CBR Group.
The type of work management consultants do varies drastically. Consulting projects can be anything from thinking up a new company strategy, to implementing a particular project, to advising in human resources. Information technology changes also bring a lot of work to consultants. PricewaterhouseCooper's Kwiatkowski said that 60-70% of his firm's management consulting work stems from information technology projects.
Management consultants also differ on whether restructuring is a one time job, or something that will go on, and pay them fees, forever.
Kraszewski categorized restructuring as something non-routine that happens "not often." Doyle, however, looked at it as something necessary. "Every business has to change," he said.
The fees management consultants charge also vary widely. Payment depends on the type of project done, as well as how many hours a consultant will spend on it. KPMG projects can cost as little as $4,000 to more than $1 million, Doyle said.
A management consultant company's focus or target group can vary. Boston Consulting group, for example, normally works with a company's top management on high-value and high-stake issues.
Many consultants also work on privatization issues, primarily with smaller domestic companies. "Most Polish companies have lower budgets," said Krzysztof Kwiecien, vice president at Ernst & Young Management Consulting Services.
But foreign consultants said that Polish management consultants are also becoming competitive when it comes to information technology. "There are probably just as many foreign companies hiring Polish consulting firms," said Doyle.
The awareness and acceptance of management consultancies are beginning to stamp out a long-held fear by Polish companies that going to a management consultancy was something to be ashamed of and a sign that your business was in trouble.
"I think this is changing now," said Jean Baron-Mazloumian of the Boston Consulting Group.
He said the number of foreign and Polish clients at his firm is "becoming more balanced."
Despite the proliferation of firms, executives said that the sector is far from being saturated. "I'm not sure I'd call it mature; the market has continued," said Greg Doyle, managing director at KPMG Polska, which has experienced 50-60% growth annually for the past three years.
At the crux of the demand are bloated, unmodernized companies, which are often restructured once a strategic investor comes in or after they are privatized through a public offering. "Certain companies know that they have to change or die," said Aleksander Kwiatkowski, a director within the management consultancy department at PricewaterhouseCoopers.
KPMG is not alone in its 50% a year growth spurt. Arthur Andersen has grown to have approximately 70 people working in management consulting, according to Dariusz Kraszewski, a board member with the firm.
According to the list, Arthur Andersen's net revenue for management consulting has increased by approximately 100% each year since at least 1996. Net revenue in 1998 was zl. 21.2 million ($5.73 million).
In addition to foreign investment and privatization, several other factors are also fueling the demand for consultants. One of them is a need for companies to begin working more like their peers in the European Union (EU), in preparation for when the country joins that economic bloc.
"Polish companies realize that they have to come closer to Western standards of management," said Jean Baron-Mazloumian, a vice president with the Boston Consulting Group.
Information technology, for example, is particularly important because software now exists that can monitor nearly everything, such as budgets and human resources. Installing those kinds of systems, however, typically requires both management consultants and investment.
But foreign investment is still spurring the most demand for consultants. As more foreign direct investment comes to Poland, competition in different sectors heats up and local companies need to change to hold their own.
At the same time, many domestic companies already have influential foreign shareholders, which are pushing them to cut costs, improve efficiency, increase market share and strengthen profit.
While many companies investing in Poland are starting greenfield operations, a substantial number are also buying up existing enterprises. The foreign management then wants to restructure and integrate these businesses into the foreign company's existing structure.
Last August, Arthur Andersen was hired to integrate three plants under one management system owned by cement maker Goraldle, which is currently more than 80% owned by the Belgian CBR Group.
The type of work management consultants do varies drastically. Consulting projects can be anything from thinking up a new company strategy, to implementing a particular project, to advising in human resources. Information technology changes also bring a lot of work to consultants. PricewaterhouseCooper's Kwiatkowski said that 60-70% of his firm's management consulting work stems from information technology projects.
Management consultants also differ on whether restructuring is a one time job, or something that will go on, and pay them fees, forever.
Kraszewski categorized restructuring as something non-routine that happens "not often." Doyle, however, looked at it as something necessary. "Every business has to change," he said.
The fees management consultants charge also vary widely. Payment depends on the type of project done, as well as how many hours a consultant will spend on it. KPMG projects can cost as little as $4,000 to more than $1 million, Doyle said.
A management consultant company's focus or target group can vary. Boston Consulting group, for example, normally works with a company's top management on high-value and high-stake issues.
Many consultants also work on privatization issues, primarily with smaller domestic companies. "Most Polish companies have lower budgets," said Krzysztof Kwiecien, vice president at Ernst & Young Management Consulting Services.
But foreign consultants said that Polish management consultants are also becoming competitive when it comes to information technology. "There are probably just as many foreign companies hiring Polish consulting firms," said Doyle.
The awareness and acceptance of management consultancies are beginning to stamp out a long-held fear by Polish companies that going to a management consultancy was something to be ashamed of and a sign that your business was in trouble.
"I think this is changing now," said Jean Baron-Mazloumian of the Boston Consulting Group.
He said the number of foreign and Polish clients at his firm is "becoming more balanced."
