Small firms weather tough 1999 by focusing on niche services
A tough 1999 had smaller management consulting firms scurrying to build practices in niche services such as external communications or computer support.
Demand for management consulting services stagnated last year, at least for some. Andrzej Glowacki, president of Doradztwo Gospodarcze DGA and president of the Economic Consultants Association (SDG), said that many firms found it more difficult to win both government and private sector contracts for management consulting services.
Last year's slower economic growth caused many companies to feel that their markets were waning, said Bogdan Dabrowski, president of GFMP Management Consultants. As a result, many firms slashed training and consulting programs, he said. Business slumped until around the fall, he said.
According to Glowacki, one of the main reasons for last year's plight was the diminishing number of privatization programs. Polish companies work mainly for the Treasury Ministry, Glowacki said, conducting analyses and making plans for private sales and public offerings.
"So far, on the Polish market, the only (management consulting) companies that counted were those which advised on privatization programs," Glowacki said.
He also noticed that Polish management consulting firms are not exceptionally innovative, making it difficult for them to find the way out of the present situation.
Business is expected to pick up, however, as "after privatization there is a serious process of restructuring," said Joanna Osinska, regional center manager of Plaut Polska. Some management consulting companies have begun focusing on restructuring programs to pitch to clients in a state of turnaround.
Others, like Holox, based in Bielsko-Biala, see opportunity in Poland's bid for European Union (EU) membership. The company wants to assist Polish companies to adapt to EU standards, especially those regarding the environment. After Poland's entry into the Union, the company will also focus on foreign companies that want to work in Poland, as well as Polish firms moving abroad, said Malgorzata Jakubiec, a Holox marketing specialist.
Even in difficult years, however, small consulting firms are managing to survive, despite constantly tackling the Big Five accounting firms. The Big Five firms Andersen Consulting, Deloitte & Touche, Ernst & Young, KPMG and PricewaterhouseCoopers also provide management consulting services and often dominate the market.
To compensate, small firms are increasingly focusing on providing niche services, executives said. "Polish companies have been looking for (their) own place on the market," Glowacki said. "They don't have too much time, though, due to the competition and the increasing demands of the clients."
DGA focuses on process management. This means working in various company departments to improve coordination as well as establishing guidelines for how activities are accomplished. With a bank, for example, this could mean better customer service. At a telecom company, the consulting firm would help the company work out how to better complete orders, Glowacki said.
Eight-year-old GFMP specializes in and focuses its services on communications. This includes both internal and external communications, said GFMP's Dabrowski. "In communication we are the best," he said.
In just the first three months of 2000, GFMP managed to pull in roughly a third of its total 1999 revenue. The company had revenue of zl. 460,000 ($112,195) in the first three months of this year, compared with zl. 1.3 million ($342,105) for all of 1999. The company physically expanded as well; supplementing its offices in Wroclaw and Poznan with a third one in Warsaw, which opened last year.
Austrian firm Plaut, which has operated in Poland since 1998, has also carved out a niche by providing support services for computer systems produced by German systems integrator SAP. The company wants to expand its net revenue from consulting, which hit zl. 13 million ($3.42 million) last year, by offering additional services to clients, such as reworking processes and helping with outsourcing, said Osinska.
Osinska said the significant market for management consulting services is continuing to attract large foreign companies. She also said that next year, Plaut expects to join the ranks of the Big Five in management consulting.
