Russian management consultants about the Russian consulting market
September, 16 in St.-Petersburg, the annual ASCONCO conference took place aboard a ship navigating the Neva river among the marvels of the ancient City of the Tsars of Russia. Besides other issues, the participants discussed the current situation of the Russian consulting market.

The clients viewpoint




Some of the clients believe that Russia will overcome the crisis more successfully than other countries, and they develop strategies for 5-10 years. Others suppose that all the markets will be narrowed, and in the nearest several years we can not hope on good conditions for business development.

We can observe significant changes in the markets: even the leaders are leaving from some markets. A number of large companies started major changes because of the complicated economic situation. As a result some of them had to close their businesses, the destiny of the others is not clear at the moment. So we can conclude, that large stable companies, which have kept leadership at their markets for a long time, may disappear, and second echelon firms may replace them. 



 

Many clients from B2C sector (for example, retail or restaurant business) report decrease in the client traffic. The spring 2011 was full of hopes, and we could note some rise after difficult years, but soon it became clear that growth is gradually stopping. Some companies have even negative dynamics. 

Naturally, in this situation major attention is paid to the effectiveness. On the one hand, every company tries to cut its expenses, many implement strict economy in everyday life, considering each penny. They save on logistics, refusing additional services, for example, cargo insurance; on consulting projects. On the other hand, everybody thinks how to live and to survive in new circumstances, on what it will be possible to earn money in the future. They consider possibilities of development new products, implementing new activities, expansion into new markets.

At the same time many companies continue to grow actively. We know examples of retail chains, which are currently enduring rapid growth. Some retail chains selling luxury goods also feel themselves comfortable at the market.

Despite the complicated situation, we noted one more positive trend: entrepreneurs of a new wave began to appear at the market. Young people, 25-35 years old. Their businesses are also very young (start-ups, 1 or 2 years old) and do not bring high income yet. Those are small retail or industrial companies, for example, catering enterprises, like bakeries or confectionaries.

 

Active interest to the Russian markets from the large western companies may be described as a tendency. Mostly those are industrial companies, working in technological spheres in B2B sector. Part of them is represented in Russia and is interested in further expansion. The other part is just going to enter the Russian market.

So, currently the following groups of clients are the most active:

• State affiliated companies and organizations. They need correct business programs to get funds from the state budget funds.

• Large Russian companies, which are interested in efficiency and development strategies.

• Large foreign companies, interested in the Russian market. They request market researches and possible strategies of entering the market.

• And young growth: small beginners, which can not buy large projects yet. But they willingly buy simple inexpensive standard consulting products. 

Par ailleurs il existe un intérêt soutenu de la part des grandes compagnies occidentales pour le marché russe, ce qui peut être décrit comme une réelle tendance. Pour la plupart, ces sociétés sont industrielles, travaillant dans le secteur B2B de la sphère technologique. Une partie de celles-ci est déjà représentée en Russie et manifeste son intérêt pour un développement ultérieur. L’autre partie ne fait qu’entrer sur ce marché russe.


 

The consultants viewpoint
Obviously the situation at the client markets immediately influences the consulting companies and consulting market as a whole. Therefore it is not surprising that the conference participants mentioned decrease in a quantity of client inquires, rise of  client insistence, client aspiration to receive more services for the same money, small inflow of new clients. The rate of converting of the inquires into projects decreased significantly. Most likely, potential clients scan prices on the services they are interested in, and then refuse consulting help because they can not afford it. Some of the participants admitted that revenue of their companies decreased to 30% from that they had in 2008.  

The quantity of inquiries about strategic sessions stably increases. But now clients order only a session without following development of organizational structure, re-engineering and so on, as it was before the crisis. And prices for this actually needed service do not attain before-the-crisis rate.

Development of business plans in different spheres, including those connected with receiving funds from banks, the state budget and from private investors, is also high-demand. It is particularly needed in the sphere of residential services in all Russian regions, including the North Caucasus. The North Caucasus economy continues to develop at a rapid pace despite the crisis. 

The conference participants discussed the ways of consulting beginning small businesses. They need separate small inexpensive products like development of standards of sales or system of grades, maintaining sales system and so on. Implementing even separate small systems may dramatically increase effectiveness of a small business. 
     
Free lancers from CIS use to come to Russia to earn. Their prices are unreal for Russian consultants. For example, corporate training lasting 20 hours from a good professional may cost $250. Their services are great-demand.