November 2004
Special report on Feaco - Sesma Conference 2004 in Athens
Interview:
Janko Arah, President AMCOS
AMCOS, the
Association of Management Consultants of Slovenia was the organizer of
the 2003 FEACO Annual Conference in Lubljiana. One year later the
Athens Conference was the perfect time to meet again with Janko Arah,
the AMCOS President, to assess the impact of the previous conference
Mr Arah you are the founder of Arah Consulting and the President of the Slovenian Association of Management Consultants. Last year you hosted the Feaco conference in Lublijana under the title «Local meets Global». What can be said one year later in term of development of the Management Consulting sector in Slovenia and in term of cooperation with Global Players?
Janko Arah : The first thing that comes to my mind is that it was the right time to have the Feaco conference in Slovenia because it was one year before we join the European Union on May 1st 2004. We were very happy to organize the Feaco conference and it gave us the opportunity to assess the Management Consulting in Slovenia and Europe and to strengthen our position with our neightbous: Austria, Germany and Hungary. The impact has been that Management Consulting in Slovenia has shown growth since then, in all terms : number of Management Consultancies and growth of overall Turn Over.
How can it be that a meeting with a hundred attendies gets such an impact?
Janko Arah : For Slovenia it was very important. Management Consulting is much more accepted now by the media and the small & middle sized companies. The meeting helped to point out what was strategy and consultants and showed the many projets that were going on. On the other hand the rise in the number of consultants and new consultancies has had one drawback : we have experienced a pressure on the fees that are down by 10% for the first time. However this led also to a pressure on quality, and the fact that enterprises are asking for the best consulting which is good for business development.
And did you scored the expected international contact with Global Players?
Janko Arah : We presented management projects with other countries. Relations have been strengthened which led to new projects, with for instance the Nederlands. A few Germans tried to make contacts. Even if the projects could not be set-up on the spot this should conclude in the future. People know us better now and have the list of Slovenian Consultancies but things have to be done on a practicle basis, which can takes a time.
How would you define Slovenia and Slovenian Consultancies. As an opportunity?
Janko Arah : Slovenia is a small economy. However the one that want to establish business can take advantage of the many Eastern langages people talk, the local legal system, tax system, local environment and history. Secondly, for most developed parts of the former Yougoslavia, (Serbia, Montenegro...) Slovenia seems to be very attractive for the multinationals firms who can do business there through Slovenian influence without taking too much risks in investing in those countries. Having very skilled people in Slovenia and being very well accepted in the Region we can act as a good plane carrier in the Balkans.
Does it mean you could be the next Offshoring destination?
Janko Arah : Unfortuntatly not. We have attracted big companies such as Adventis, Renault, L’Oreal... because of the skill of the people here and as I said due to our strategic platform in the Balkans. But Poland and the Czech Republic, Slovakia and Hungary have more possibilities with far more people with lower wages. Slovenian wages are huge and the economy is well organized, so we have a good output but it is not cheap. Most Outsourcers want to minimize the cost and rent places were prices are low then hire young skilled people from other European Countries. Therefore the big 5 Outsourced Services are located in Hungary, Poland, Czecky but not in Slovenia. I asked my Slovenian colleagues on this point last year. There answer was no, Management Consultancies dont outsource in Slovenia. So we definitly are a plane carrier with activity in other Balkan States.
Well there is another plan carrier in this Balkan area, Greece, which has a remarquable vessel anchored in the Mediterranean sea. How do you compare to the Hellenic State?
Janko Arah : Somehow Greece is a challenger, especialy because it is a old member of The European Union and has a lot of resources. Greece has had a lot of management consulting activity and services in the Balkans, even in Slovenia and I did not heard of Slovenian doing something in Greece. However they are interested in joint projects in Eastern Countries such as Kasakhstan, Tadjikistan, Ukraine where we can operate easily, because the European Union is going to give aid to these countries. Greeks have good connections in Brussels know how to secure the budgets. We spoke about this yesterday after my speach and I decided to inform my members so that we can have rapid and concrete results with Greek consultancies after this conference possibly leading to Start-ups.
We heard that it was not easy for Greek Consultancies to directly operate in Eastern Europe. What about Russia, a country you personnaly very well know?
Janko Arah : It is a big country. There is 400 Management Consulting Firms and nearly 7000 Management Consultants in Russia. But there is a different level of doing Consulting. We do have there two major Cities (Moscow and St Petersbourg)... and the rest. If you want to do business you have to consider Moscow. That is what we did !.. All big Consulting Players are there because there are many global investors from Western Countries, mainly from Germany. It started 10 years ago. There is a huge potential market but not one that easy because the philosophy of existing managers is that «they get their skill by doing the job» and their motto is «I know better» so it is difficult to give advice.
When and how did you enter that difficult Eastern market ?
Janko Arah : In March 1998 when we presented a book on the European Union at the Douma (Lower Chamber of the Russian Parliament). This book had been written by Metka Arah my wife, Phd in Political Sciences and International Relations. The presentation of the book was an investment in image for the Arah Consulting activity. Following the philiosophy of my company we started with the Quality System. It started in 1991 and the book written in Slovenian was published in April 1995. It was presented in December 1995 in Croatia then translated and presented in 1998 in Russia. At that time we wanted to show what was an approach from outside (my wife has a scientist thesis) and with the quality of the book we wanted to show the quality of the system. We sold 5000 pieces in 3 months in Russia. The presentation at the Douma was completly private but we had a nice speech from a commissionneer. In Russia they did not want to publish it in a good way, an improved way, so it proves that it is much more difficult to «jump over». This show the limit of consultants on new projects in Russia. However it has been well received by The Russian Academy of Siences and we were invited to make lectures.
This year you have shown in Athens figures presenting the Eastern Management Consulting Market. Other speakers reported on Europe and Asia. To conclude this interview what comes to your mind about these many different figures?
Janko Arah : Let’s start with my presentation of the Eastern Europe markets. It was a special challenge for me to come to Greece personaly because I had to prepare myself for 6 months visiting Consultants in Budapest, Prague, Helsinki and new EU states like Estonia, Latvia, Lithuania etc...and then show my figures. About the other speakers reporting on development of Management Consulting in Europe and the World (T Smith, Matt Lyons, KK Yeung from Hong Kong) they pointed out the Outsourcing of non core consulting activity from West to CEC (Central European Countries) and China. The consequence is this new structure of MC which is reshaping itself and the form of the pyramid into that of a diamond, as it has been shown, which is a logical consequence if you loose part of the activity which were pillars of the Consulting Firms or companies and that are now Outsourced. The other consequence of this new situation is that the demand is focused toward the hiring of the most experienced MC and not le lower staff (juniors, commodity jobs). Therefore there are many Consultancies were employees are reduced. And for Europe as a whole a part of the 300 000 consultants can be Outsourced, which explain some kind of overcapacity we encountered recently. Another phenomenon is that as we Outsource the jobs we Outsource the consultants that go with it. So the final consequence is that the weakest consultants are at risk and will disappear.
Words collected by Bertrand Villeret
ConsultingNewsLine
Athens Astir Palace Vouliagmeni 22 October 2004
Mr Arah you are the founder of Arah Consulting and the President of the Slovenian Association of Management Consultants. Last year you hosted the Feaco conference in Lublijana under the title «Local meets Global». What can be said one year later in term of development of the Management Consulting sector in Slovenia and in term of cooperation with Global Players?
Janko Arah : The first thing that comes to my mind is that it was the right time to have the Feaco conference in Slovenia because it was one year before we join the European Union on May 1st 2004. We were very happy to organize the Feaco conference and it gave us the opportunity to assess the Management Consulting in Slovenia and Europe and to strengthen our position with our neightbous: Austria, Germany and Hungary. The impact has been that Management Consulting in Slovenia has shown growth since then, in all terms : number of Management Consultancies and growth of overall Turn Over.
How can it be that a meeting with a hundred attendies gets such an impact?
Janko Arah : For Slovenia it was very important. Management Consulting is much more accepted now by the media and the small & middle sized companies. The meeting helped to point out what was strategy and consultants and showed the many projets that were going on. On the other hand the rise in the number of consultants and new consultancies has had one drawback : we have experienced a pressure on the fees that are down by 10% for the first time. However this led also to a pressure on quality, and the fact that enterprises are asking for the best consulting which is good for business development.
And did you scored the expected international contact with Global Players?
Janko Arah : We presented management projects with other countries. Relations have been strengthened which led to new projects, with for instance the Nederlands. A few Germans tried to make contacts. Even if the projects could not be set-up on the spot this should conclude in the future. People know us better now and have the list of Slovenian Consultancies but things have to be done on a practicle basis, which can takes a time.
How would you define Slovenia and Slovenian Consultancies. As an opportunity?
Janko Arah : Slovenia is a small economy. However the one that want to establish business can take advantage of the many Eastern langages people talk, the local legal system, tax system, local environment and history. Secondly, for most developed parts of the former Yougoslavia, (Serbia, Montenegro...) Slovenia seems to be very attractive for the multinationals firms who can do business there through Slovenian influence without taking too much risks in investing in those countries. Having very skilled people in Slovenia and being very well accepted in the Region we can act as a good plane carrier in the Balkans.
Does it mean you could be the next Offshoring destination?
Janko Arah : Unfortuntatly not. We have attracted big companies such as Adventis, Renault, L’Oreal... because of the skill of the people here and as I said due to our strategic platform in the Balkans. But Poland and the Czech Republic, Slovakia and Hungary have more possibilities with far more people with lower wages. Slovenian wages are huge and the economy is well organized, so we have a good output but it is not cheap. Most Outsourcers want to minimize the cost and rent places were prices are low then hire young skilled people from other European Countries. Therefore the big 5 Outsourced Services are located in Hungary, Poland, Czecky but not in Slovenia. I asked my Slovenian colleagues on this point last year. There answer was no, Management Consultancies dont outsource in Slovenia. So we definitly are a plane carrier with activity in other Balkan States.
Well there is another plan carrier in this Balkan area, Greece, which has a remarquable vessel anchored in the Mediterranean sea. How do you compare to the Hellenic State?
Janko Arah : Somehow Greece is a challenger, especialy because it is a old member of The European Union and has a lot of resources. Greece has had a lot of management consulting activity and services in the Balkans, even in Slovenia and I did not heard of Slovenian doing something in Greece. However they are interested in joint projects in Eastern Countries such as Kasakhstan, Tadjikistan, Ukraine where we can operate easily, because the European Union is going to give aid to these countries. Greeks have good connections in Brussels know how to secure the budgets. We spoke about this yesterday after my speach and I decided to inform my members so that we can have rapid and concrete results with Greek consultancies after this conference possibly leading to Start-ups.
We heard that it was not easy for Greek Consultancies to directly operate in Eastern Europe. What about Russia, a country you personnaly very well know?
Janko Arah : It is a big country. There is 400 Management Consulting Firms and nearly 7000 Management Consultants in Russia. But there is a different level of doing Consulting. We do have there two major Cities (Moscow and St Petersbourg)... and the rest. If you want to do business you have to consider Moscow. That is what we did !.. All big Consulting Players are there because there are many global investors from Western Countries, mainly from Germany. It started 10 years ago. There is a huge potential market but not one that easy because the philosophy of existing managers is that «they get their skill by doing the job» and their motto is «I know better» so it is difficult to give advice.
When and how did you enter that difficult Eastern market ?
Janko Arah : In March 1998 when we presented a book on the European Union at the Douma (Lower Chamber of the Russian Parliament). This book had been written by Metka Arah my wife, Phd in Political Sciences and International Relations. The presentation of the book was an investment in image for the Arah Consulting activity. Following the philiosophy of my company we started with the Quality System. It started in 1991 and the book written in Slovenian was published in April 1995. It was presented in December 1995 in Croatia then translated and presented in 1998 in Russia. At that time we wanted to show what was an approach from outside (my wife has a scientist thesis) and with the quality of the book we wanted to show the quality of the system. We sold 5000 pieces in 3 months in Russia. The presentation at the Douma was completly private but we had a nice speech from a commissionneer. In Russia they did not want to publish it in a good way, an improved way, so it proves that it is much more difficult to «jump over». This show the limit of consultants on new projects in Russia. However it has been well received by The Russian Academy of Siences and we were invited to make lectures.
This year you have shown in Athens figures presenting the Eastern Management Consulting Market. Other speakers reported on Europe and Asia. To conclude this interview what comes to your mind about these many different figures?
Janko Arah : Let’s start with my presentation of the Eastern Europe markets. It was a special challenge for me to come to Greece personaly because I had to prepare myself for 6 months visiting Consultants in Budapest, Prague, Helsinki and new EU states like Estonia, Latvia, Lithuania etc...and then show my figures. About the other speakers reporting on development of Management Consulting in Europe and the World (T Smith, Matt Lyons, KK Yeung from Hong Kong) they pointed out the Outsourcing of non core consulting activity from West to CEC (Central European Countries) and China. The consequence is this new structure of MC which is reshaping itself and the form of the pyramid into that of a diamond, as it has been shown, which is a logical consequence if you loose part of the activity which were pillars of the Consulting Firms or companies and that are now Outsourced. The other consequence of this new situation is that the demand is focused toward the hiring of the most experienced MC and not le lower staff (juniors, commodity jobs). Therefore there are many Consultancies were employees are reduced. And for Europe as a whole a part of the 300 000 consultants can be Outsourced, which explain some kind of overcapacity we encountered recently. Another phenomenon is that as we Outsource the jobs we Outsource the consultants that go with it. So the final consequence is that the weakest consultants are at risk and will disappear.
Words collected by Bertrand Villeret
ConsultingNewsLine
Athens Astir Palace Vouliagmeni 22 October 2004
Janko Arah
President AMCOS
President AMCOS
Planetecologie.org