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April 2013
April 2013
| Russian Consulting Market Trends 2012-2013 | |||
| Report
by ASCONCO, Moscow |
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ASCONCO
meetings traditionally begin with
sharing the news, opinions and important events. If they are grouped
and
generalized, one will get certain slice, or image of what is happening.
So what is
happening?
After the crisis of 2008-2009 remission came and lasted during 2010-2012. Yes, the number of requests and projects decreased; yes, the projects became shorter; yes, the working conditions got tougher in terms of both requirements to the results and payment terms. Nevertheless, certain revival of the market, if not its growth, was sensed explicitly during those years and many companies managed to reach practically the precrisis level. However, proceeds of some companies were reduced by a factor of ten as compared with the precrisis indices. In whole, everybody finished the year of 2012 rather well with the average augmentation by 15-20% to the year of 2011. At the same time, everyone agreed that the crisis isn’t over and improvement of the market situation hasn’t become a stable tendency at all. The first quarter of 2013 bids fair to be not quite successful for companies dealing with medium Russian private companies. The situation is somehow alleviated by deferred payments for projects completed in the last quarter of 2012 but the number of requests for consulting is decreasing. And while in 2008 the consultants could select the most interesting projects and turn down the least attractive ones, almost nobody has had such an opportunity in the recent years. It seems like the situation starts to change in 2013. While the first quarter of the latest two years was rather lively, slackness is observed in the market in the first quarter of this year like in 2009. That also concerns new addresses from potential clients and receipt of payments for the work that had already been performed. In whole, the colleagues feel decrease of the request for consulting from the direction of business. Probably, that is due to the cost of consulting projects which is now beyond their means for some clients and some of them prefer, if necessary, to hire an employee who, in their opinion, will be able to solve required tasks. One of the tendencies noted is a bigger amount of requests from foreign companies. Obviously, that is due to deterioration of the economic situation in Europe. Since raw material producing Russia manages to overcome the waves of crisis rather smoothly for the time being (in comparison with other European countries and USA), despite obvious lowering of living standard, Russia is still an attractive market for many Western businesses. It may be expected that in future they will address a mass request to consulting companies for market researches, build-up of market entry strategies, assistance in search for partners etc. Certain changes take place in the training market, as well. It seems like Moscow companies experience disappointment by this kind of service because of high cost and insufficient efficiency. In fact, if the graph is considered, the effect produced by the training carried out looks like a small spike which comes to naught very soon and then people go on following the beaten path as if there was no training at all. At the same time, in the market there is the request for training but with another depth of immersion into the subject and in the form that differs from the traditional one. Those may be distance education programmes or multistage contest carried out among employees, which is a form that presupposes not only the training itself but also motivation of the staff for training as opposed to the traditional training etc. Another positive tendency consists in appearance of requests and start of negotiations with a great number of small young businesses with the turnover of 2-8 mln. dollars. Lots of experienced businessmen who started their work in the 1990-s have already got tired of Russian realias, on the one hand, and have already proved all they wanted to prove to themselves and to others. Having saved up funds allowing them to live in one of the Western countries with this or that degree of comfort, they are moving slowly in that direction. And at that moment a new generation of entrepreneurs appears on the scene. They are active, interested and willing to work and to develop their business in Russia. The consultants noted that some tendencies of the market take us back to the 1990-s. Those are the attempts not to discharge obligations after the work has been performed and presented and lower level of professionalism of the owners and top-managers (and therefore, lower quality of the requests for consulting). However, there are some differences. While the first generation of entrepreneurs studied actively and acquired the field of knowledge that was new to them often finding surprising solutions and making unique discoveries, the new generation isn’t interested in getting basic knowledge. They need simple clear instructions what to do in this or that situation. They also need constant coaching as the situations are always changing. Formulae
for survival
The consulting companies that have no margin of safety in the form of a regular customer, who carries out changes year in and year out and needs consulting support, have a hard time. It's not a good time for those who don't have an affiliated foreign partner that throws in orders received through his own channels from time to time, either. How can such companies survive these hard times? Experience of the colleagues shows that for small and unspoiled companies it is sufficient to get 2-3 good orders during the year not only to break even but to get a profit. That's excellent if there is at least 1 (and better 2 or 3) long-term agreement concluded with huge companies, which may serve as the basis and the welfare assurance to some extent and to which smaller projects can be added during the year. Another method that should be tried is to get a new product, which is either aimed at more prospective clients' niche or matches today's needs of the clients better, enter the market. For example, it can be such a product that is able to provide the result that is tangible for the client with few expenses and within a short period of time. It is clear that if the client is content, such an express-project has the chance to grow into a more enduring and interesting project for the consultant. Probably, market entry by inexpensive simple 'packaged' products will work for small-scale businesses. The colleagues also shared the experience of changing the target clients' niche: instead of direct sale of the service to the customers, they started to work under subcontract with huge consulting companies performing a portion of work in big projects for those companies in accordance with their specialization. Such projects are much more marginal; the most complicated part of the project that is sale is executed by the general contractor; and if you managed to sell your services to him once and he was content with the results of such cooperation, you may count on joint work with him in future. We are known for our ability to survive in tough conditions and our ability to find solutions in those situations that seem to be hopeless. Most probably, there are other possibilities and methods of overcoming crisis complicacies. We will be happy if you share your solutions with the colleagues! |
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English
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Image : Courtesy ASCONCO, Moscow 2012 Text : Original versions in English and Russian : Copyright ASCONCO, Moscow 2013 French version : Bertrand Villeret, ConsultingNewsLine 2013 To know more :  www.stepcons.com/ Copyright Quantorg 2013
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