Management consulting has grown quickly, with growth rates of the industry exceeding 20% in the 1980s and 1990s. As a business service, consulting remains highly cyclical and linked to overall economic conditions. The consulting industry shrank during the 2001-2003 period, but has been experiencing slowly increasing growth since. In 2007, total global revenues for management consulting are expected to exceed the...

$300 billion mark. Currently, there are four main types of consulting firms. First, there are large, diversified organizations that offer a range of services, including information technology consulting, in addition to a strategy consulting practice. Second, are the medium-sized information technology consultancies, that blend boutique style with some of the same services and technologies bigger players offer their clients. Third, are the large management and strategic consulting specialists that offer primarily strategy consulting but are not specialized in any specific industry. Finally, there are boutique firms, often quite small, which have focused areas of consulting expertise in specific industries or technologies. For instance, Roland Berger is well-known in Europe for its skills in downsizing and cost-killing.

  Most of the boutiques were founded by famous business theorists. A fifth type of global consulting firm is emerging. Sourcing Advisory services deal with choices between insourcing and outsourcing, vendor selection, and contract negotiations. The top 10 sourcing advisors (as ranked by the Black Book of Outsourcing) were Alsbridge, TPI, EquaTerra, NeoIT, Pace Harmon, PA Consulting, RampRate, Deloitte, Gartner, and Everest. Although a fast growing sector, the largest sourcing advisory practices would likely be classified as boutiques when considering the management consulting industry as a whole - with one of the largest players, TPI, for example, citing 2006 revenues of less than US$150M during its acquisition by ISG. The rise of internal corporate consulting groups. Added to these approaches are corporations that set up their own internal consulting groups, hiring internal management consultants either from within the corporation or from external firms whose employees have tired of the road warrior lifestyle. Many of these corporations have internal groups of as many as 25 to 30 full-time consultants. The internal consultant approach is chosen for three reasons. First, the corporation does not want to pay the large fees typically associated with external consulting firms. Second, they want to keep certain corporate information private. Finally, they want a group that more closely works with, and monitors, consulting firm relationships. Often, the internal consultant has less ramp up time on a project due to familiarity with the corporation, and is able to guide a project through to implementation—-a step that would be too costly if an external consultant were used. Internal consulting groups are often formed around a number of practice areas. The more common areas are: organizational development, process management, information technology, design services, training, and development. There are several potential problems facing internal consultants, and those who employ them. The internal consultant may not bring the objectivity to the consulting relationship that an external firm can. An internal consultant also does not bring to the table best practices from other corporations.

  When the consulting industry is strong, it can be difficult to recruit candidates who are of the same high calibre as those working for outside consulting firms. Lastly, when financial times get tough, often the internal consulting group is the first to face layoffs. Despite consistently high and growing revenues, management consultancy also consistently attracts a significant amount of criticism, both from clients, and also from management scholars. Management consultants are often criticized for overuse of buzzwords, reliance on, and propogation of management fads, and a failure to develop plans that are executable by the client. A number of highly critical books about management consulting argue that the mismatch between management consulting advice and the ability of business executives to actually create the change suggested results in substantial damages to existing businesses. Irreputable consulting firms are often accused of delivering empty promises, despite high fees. They are often charged with “stating the obvious” and lacking the experience on which to base their advice. These consultants bring few innovations, and instead offer generic and "prepackaged" strategies and plans that are irrelevant to the client’s particular issue. They may fail to prioritize their responsibilities, placing their own firm’s interests before the clients'. Further criticisms include: analysis reports only, junior consultants charging senior rates, reselling similar reports to multiple clients as "custom work", lack of innovation, overbilling for days not worked, speed at the cost of quality, unresponsive large firms & lack of (small) client focus, lack of clarity of deliverables in contracts, and more. More reputable firms, in contrast, adhere to and internalize specific codes of ethics to fortify client relationships by offering fair advice and accepting transactions only if they benefit their clients. In other words, if the consultancy cannot provide effective services to their clients, it will pass on the opportunity, even if the client is willing to pay the fee. Integrity is key in any professional or social setting. Companies adopt an unwritten or sometimes written obligation to serve the people first, before the firm's own interests. In order to do so, managers and employees alike must be honest and divulge information about the company to parties externally and internally. Mistakes both big and small must be publicized and remedied. Basic honesty results in trust, loyalty, and the well being of the company employees, as well as that of its clients. In order to exude these qualities to clients, consultants must embrace as well as internalize codes of ethics, which ultimately lead to strong interrelationships between employees and clients. How to Start a Consulting Business. Starting a consulting business? If you have expertise and skills that others need, starting a consulting firm may be your ticket to the entrepreneurial ball. This article walks you through the process. In recent years, consulting has been a buzzword in business. As companies have downsized, they have increasingly outsourced projects and jobs to consultants, many of whom have been the victims of downsizing themselves. Contrary to conventional wisdom, not every downsized employee can or should start a consulting business.

  The reality is that consulting businesses are just that – businesses. Like any other business they require a significant amount of dedication and business savvy to be profitable. Before taking the plunge into consulting, here are questions that need to be addressed: Do you need a license or other special certification? Depending on the type of services you provide, some states may require a license or a special certification. In addition to the cost of obtaining the license or certification, you may need to meet coursework or seminar requirements. While some consultants, such as fundraising consultants, aren’t required to be certified by law, they will still need certification in order to be competitive in the marketplace. Are you qualified to be a consultant? Consultancy may seem like a great way to make a living following a career setback. But somewhere along the way you need to ask yourself whether or not you are actually qualified to be a consultant. Keep in mind that your clients will expect you to be the expert. Being conversant in a subject area is a far cry from expertise. Unless you are absolutely confident in your ability to offer expert advice in your subject area, you may want to reconsider another vocational goal. Are you prepared to market yourself? Self-promotion is the lifeblood of consulting. You may be the world’s leading expert in your subject area. However, you’ll never make a dime in consulting unless you are able to market your services to the right people. As the owner of your consulting business, you will need to learn how to advertise, market, and network. At first, it may feel awkward “tooting your own horn” to prospective clients. But keep at it – it will get easier! How much will you charge?Deciding how much to charge for your services is crucial to the success of your consultancy. When you worked for an employer, the employer most likely provided fringe benefits such as health insurance and retirement benefits, as well as the overhead costs involved with running the business. As the owner of a consulting business, you now need to cover those costs yourself. As such, your fee schedule needs to reflect the added financial burden of your new business. Start by surveying how much other consultants are charging for similar services and decide where you want to be priced in the marketplace. Also, plan to charge on an hourly basis rather than a project basis. Should you ever not charge for services? Despite the need to charge a fair price for your services, you should consider offering free initial consultations to prospective clients. Increasingly, free initial consultations are becoming the industry standard. But more importantly, a free, no-risk consultation will give you an opportunity to establish trust and lay the building blocks of a successful long term relationship.