Sept 2007

Report on the FEACO meeting in Budapest
Interview : Dr Gabor Kornai
Managing partner of AAM Consulting

Gabor Kornai is a hungarian consultant with the local firm AAM (Verzetôl Informatikai Tanâcsadô Zrt) he founded. He is currently a Vice President of VTMSZ, the
Association of Management Consultants of Hungary. At the Budapest meeting he gave a lecture intitled «The tiniest giant».

Gabor Kornai you are the founder of AAM Consulting and a typical hungarian consultant. Before introducing us to the particlar features of the hungarian market may we learn from you a few things about the history of your cosultancy and about yourself ?

Gabor Kornai : I am a long time practitioneer. I started as a scientist in economics which explain that I still lecture in Pècs University. About the consutancy itself,  I founded it 12 years ago, in 1994. It was primarily devoted to Project Management, System Design with a special Software department to come with. Today we are 200 people with a Turn-over of about 13 to14 Millions Euros. Our clients are 50% from the public sector  and 80% of the activity comes from the local market, the rest from abroad, especially from Romania, Bulgaria, Maceidonia, Croatia with the support of the European funding framework (PHARE) where we have some great competitors such as the greek consultancies Rambol, Cow, Planet...

What about the specificity of the domestic hungarian market

Gabor Kornai : The Hungarian market is a very specific one, it is very "Brand concious"... I mean «I buy it if it is BCG etc...», but the history makes some culture accustomed such as the German so it is open to companies such as Roland Berger etc... So a well known name plus some people speaking hungarian is not the key, but for success it make it easier. This is true for the highest part of the market. Otherwise, small and medium sized companies do not buy consulting services. The government is not doing something against that but maybe the professional business services for SME of the European [community] might solve that. It may still be a problem but also an opportunity.

This is about the wize of the customers, but what about the size of the consutancies?

Gabor Kornai : Big consultancies and small ones, nothing in between...

You said you were 200 peoples...

Gabor Kornai : Maybe we are the only middle sized company. And the gap is very high with Accenture and KPMG. Only big companies, and small ones

Are all  big international consultancies represented ? And how organized is the professional field ?

Gabor Kornai : Deloitte has no employee in Hungary (it is a Central Europe body) so maybe 20 hungarians work with Deloitte... E&Y gives some business advice. Accenture, KPMG and  [newly found ?] FMC (Financial Management Consultants) are acting as broker of services. The market is not quite transparent in term of who works with whom... we dont know each other and a number of operators are not well known. So it is difficult to base any benchmark and the representativity of the available data stays low. Of our 50 association members only 20 maximum respond to the questionaires.

So we understand that the consulting market is not completly structured. But, what if a french consultancy wants to come here?

Gabor Kornai : There will be a language problem. Speaking a second language is [only] 12% at the university and this second language is mainly English then  German... and French is as low as Russian...

Will it be some kind of shortage in the righ people to hire?

Gabor Kornai : No, you would find your people . The recruiting is very much complexe but you would find your people.

What seems central to you to any success here?

Gabor Kornai : To be a Niche Palyer and bring something new to the market. The main demand is satisfied by the present companies and the competition is strong, which explain that the fees are high. So definitly bring something new.

What about buying an already existing company?

Gabor Kornai : Yes but if you buy it « like this » you may loose your make. You may loose the best. Better hire, there is no shortage.

Are German companies controlling the management market?

Gabor Kornai : I dont think so, and I dont think they can.. Nobody can control today this market (Berger, Proudfoot...) It is too much segmented :  AAM, which is the largest Hungarian consultancy, has only 2 to 4% of the domestic market share. What’s more it is not consolidating at the moment... it is much more growing in term of number of firms. It is growing and this is especially due to Spin-Offs that overtake the few mergers going on. People dont like to be sold so they spin off !For exemple Ernst & Young sold its activity to Capgemini who bought 20 to 25 of the Ernst & Young left,  which made a row. All refused and left. We have numerous examples : PwC selling to IBM, on the way some formed FMC which still exists and is propering., even if some went from FMC to IBM.

Is this specific to the Hungarian people?

Gabor Kornai : This is the typical characteristic of this culture. And this holds true for most of the intellectual workers that may be more sensitive than the rest of the people on topics on their own will. You have certainly seen this last week when the people commemorated the 50th anniversary of the 1956 revolution for which they expressed their willingness for liberty and freedom...

Words collected by Bertrand Villeret
Editor in Chief

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