April  2011 

Consulting in Russia
Interview : Svetlana & Evgeny Emelyanov

Евгений и Светлана Емельяновы
Ассоциация консалтинговых компаний России

Svetlana and Evgeny Emeliyanov are respectively CEO and President of Step Consulting (www.stepcons.com/), a Moscow based consultancy. In 2007 they devised ASCONCO (www.asconco.ru), the first association devoted to helping management consulting firms in Russia. ASCONCO recently consolidated Russian data and issued a report on the Russian Management Consulting Market (cf. report). As most consulting markets after the 2008 world economical crisis, the Russian consulting market has been hit by the recession. However this young market should pick up and already displays a large potential of development. In times of big changes in the global strategic battlefield, the Russian market shows opportunities consultancies should assess

Svetlana and Evgeny, Consulting is developing in Russia. What are the main features of this market and how does it compare with other main markets in Europe such as Germany, France, UK and the Central European markets?

Svetlana & Evgeny Emeliyanov : Since the beginning of the crisis development of consulting in Russia at least has slowed down. Consulting companies are experiencing the same difficulties as their clients. The price of a business hour has leveled down, requirements to the participants in tenders has become tougher. Customer desires to receive more various types of consulting services for the same price. Number of companies, acting in the market, has reduced. Part of them has frozen their activities and is being in the state of anabiosis, another part has had to fire up to 50% of their staff. We could not notice the cases of expansive growth of consultancies. The most problem-free and successful sector is still IT consulting. Russian consulting market isn't still fragmented enough. The process of consultancies' specialization was in progress. In the  crisis the process has been suspended.   The largest share of the market belongs to large consulting companies and to freelancers. Consulting SMEs hold the least market share.

How does the market break out in elements such as International Big Five, Large Russian Brands and Small Local Firms ?

Svetlana & Evgeny Emeliyanov : The market is divided between large companies (be it foreign or russian) and  and numerous Freelancers. There is no such a thing  as mid-sized consulting companies. In IT consulting sector there exists Large Russian Brands such as 
Парус (Parous,  www.parus.ru/
), Фирма 1С (FIRMA 1C, www.1c.ru/ www.1c.ru/eng/title.htm), and IBS (Informational Business Systems, www.ibs-company.com/)The same with Recruitment or Headhunting, the most well-known  large Russian brand being АНКОР (ANCOR, ancor-group.com/ ancor.ru/). In Management Consulting there are Big Fives and Small Local Firms (cf. ASCONCO)... In Financial Consulting and Audit there are Big Fives and Large Russian brands, such as, for example, ФБК (FBK which also appears under the brand PKFpkfmoscow.com/).

The crisis should last long but some early signs of recovery are already observed in Western Europe. Do you observe this upturn in the Russian market? Is there any change in the market shape since the crisis?

Svetlana & Evgeny Emeliyanov :  We can observe separate signs of improvement of the situation in some sectors of Russian consulting market. In other sectors there is no any improvement, but in opposite there is a worsening in 2010 if being compared to 2009.  Nevertheless, the crisis did not urge Russian economy to structural transformations. During the last period external pressure on Russian business has increased, and the terms of its functioning has become worse.

Deregulation, privatization on one hand, the rise of big monopolistic companies (in Energy for instance) and conglomerates on the other hand… How this really is and how does this impact the possibility of doing consulting in Russia? Is consulting prevented from working with large companies?  Is there a strong separation between private, public and local public companies/organizations ?

Svetlana & Evgeny Emeliyanov : There is no significant difference between state and private companies. Nobody prevents consultants from working with large organizations.

Since 1989 Russia has seen the development of a large Middle Class.  Is this somehow a real drive behind the development of a few specialties such as Marketing, Mystery Surveying, Market Strategy, Competitiveness  Assessment …

Svetlana & Evgeny Emeliyanov : Yes, certainly. These are taught in institutions and universities, in various training centers of the country.

Has Coaching, HR Management and Recruitment consulting developed as it did in Western Europe ?

Svetlana & Evgeny Emeliyanov : In Russia these sectors are
also developing successfully.

Same question for Innovation and R&D. Is the market ready for having this kind of consulting  or is R&D still too confined within state organizations and university to be a topic dealt by the private sector?

Svetlana & Evgeny Emeliyanov : Innovation and R&D has been always popular in Russia. They were developed in research institutes, and later - also in private companies. During the last years the course to modernization has become the official slogan of the Russian government, and it is actively introduced in state companies as well.

Asconco was founded in 2007 and registered in 2008 ?  What is it aiming at and why should a foreign consultancy take membership?

Svetlana & Evgeny Emeliyanov :  ASCONCO is an acronym for Association of Consulting Companies. It was founded in 2007 by three consultancies: Step Consulting in Moscow
(www.stepcons.com/ also known as КОНСАЛТИНГ-ЦЕНТРА ШАГ Konsoulting/Tsientra JAG :  www.stepconsulting.ru/index.shtml) and 2L, Logistics Logic, also in Moscow, and ALT R&D Company in St.-Petersburg. ASCONCO received its official registration in 2008.  The founders of ASCONCO have participated in annual conferences and other events held by FEACO since 2006. Association of Russian consulting companies (ASCONCO) is a goodwill alliance of consulting companies, which consolidate their resources in order to form a civil consulting market in Russian Federation. Members of ASCONCO realize,  that leading of effective consulting business in a highly fragmented market with extremely low entry level is a difficult task. That is why our aim is that ASCONCO will become a brand associated with high quality of consulting services. On the other hand, ASCONCO permanently conducts work targeted at joining to European Federation of Management Consultancies Associations (FEACO). As a consequence, ASCONCO's members in their activities oblige to follow ethic and professional standards of our European colleagues. It will help them to develop image of responsible and sustainable partner in business interactions at the Russian market. For the same purposes ASCONCO strives to protect interests of developing consulting market at all available levels, including public administration. To perform this mission ASCONCO leads major internal work. The members of ASCONCO regularly meet at seminars and conferences, where they have chance to exchange their professional experience. They also have possibility to get involved into FEACO's activities and to use working experience of their Russian and international colleagues. ASCONCO establishes intensive information exchange between its members both with internal and external consulting news. The strong point of ASCONCO is striving for maximum professional diversity and wide regional representation of its members. Specialization of ASCONCO's members in a wide range of consulting activities provides a unique possibility to create partner's alliances and to integrate possibilities of different companies in realization of extensional and complex consulting projects.

If a Western consultancy wanted to develop in Russia what might be your advices ?  Should it be necessary to localize their offices in Moscow or Saint Petersburg? Or would local offices be mandatory? Is starting from scratch a possibility or coming in with its own clients the only option? Is cooperation with local consultancies a possibility? Any example to talk about?

Svetlana & Evgeny Emeliyanov : They could come and begin working. Except Big Fives there are plenty of companies successfully working in Russia in such sectors as legal consulting, IT consulting, Branding, trainings etc. It is not necessary to set up the own office of the company. It's possible to work with interim office or through a Russian consultancy (for example, like Russian ALT R&D Company  and Global Intelligence Alliance). It is not also necessary to enter the market with its own client. Nobody prevents from spreading marketing activities on the spot. For example, Greeks and Indians addressed already to STEP Consulting, asking for support in organization of promo-seminars. John Van Eiken (Джон Вон Эйкен) successfully organized his own sales together with a local company.

How is the banking system working with consultancies? Is it intricate or is it difficult to help clients fund their projects?

Svetlana & Evgeny Emeliyanov : For eastern consultancies it would be simpler to work with Russian offices of Eastern banks.Plenty of them are represented in Russia.

Strategically speaking, is Russia a platform to start business abroad (as Greece is for the Balkan for instance, or Hong Kong for the Asian market) ?

Svetlana & Evgeny Emeliyanov :  It is quite possible.

In 2009 Russia has held the first Summit of BRISK States (Brasil, Russia, etc) in Yekaterinburg. How will consulting help Russia to develop a commercial leadership at an international level?

Svetlana & Evgeny Emeliyanov :  Working with Russian business organizations' consultants help them become more interesting in foreign partners and investors. Because many of them are really interested in becoming a part of international business-community.

If there was any last advice to the consultants that are interested in entering the Russian consulting market what might it be ?

Svetlana & Evgeny Emeliyanov : We would say "You should just come and try". All who wanted to enter Russian market have managed to do this. And after that is said and done it is as in any business: you should clearly realize what you want to offer, and to whom you want to offer it. The experience of our Eastern colleagues, who thought that just their appearance in the Russian market would be interesting for Russian clients, showed that it was a mistake. It's
clearly necessary to understand the needs of Russian clients. Furthermore we feel that our clients have more necessity for specialized expert consulting in such spheres as engineering, construction, agriculture and so onµ... The role of benchmarking is also increasing. That is why ASCONCO will be glad to set-up any partnership in those fields.

Svetlana & Evgeny, thanks for your advices and let's hope they will be usefull to the readers who will come to ASCONCO for starting their activity in Russia.

Words collected by Bertrand Villeret

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Courtesy Svetlana & Evgeny Emelianov,  Moscow 2011

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