Considering the Decline in Consulting Firms’ Value as More Companies Hire Former Consultants: A Human Capital Management Perspective

Introduction

Hello, this is "HR Kaoru."

Today, I’d like to take a look at the current situation where more companies are hiring former consultants while consulting firms are seeing a decline in their perceived value.

I’ll analyze this from the perspective of human capital management (HCM).

1. The Success of Former Consultants

(1) Success in Business Corporations

It has become increasingly common for people who honed their skills in consulting firms to thrive in business corporations.

We have multiple former consultants working in our company as well.

These individuals bring problem-solving skills and strategic thinking that significantly contribute to the growth of the business.

Their experience and skillsets become major assets for the company.

Examples:

• Problem-solving skills:
  They are well-versed in tackling complex issues and can propose quick and effective solutions.
  

• Strategic thinking:
  With a long-term perspective, they are able to devise and execute corporate strategies.

(2) Transforming Corporate Culture

Former consultants also play a vital role in embedding a culture of efficiency within companies, promoting data-driven decision-making and process improvements.

This helps companies enhance competitiveness and ensure sustainable growth.

2. Reducing Consulting Costs

(1) Rethinking Dependence on Consultants

As more companies bring in former consultants, there’s been a noticeable decrease in reliance on consulting firms.

This shift enables companies to reduce consulting fees and redirect that budget to other initiatives.

Examples:

• Developing internal talent:
  By cutting consulting fees, companies can invest in internal talent development programs, strengthening long-term competitiveness.
  

• New business development:
  Reinvesting consulting costs into new business ventures and innovation helps drive corporate growth.

3. The Current State of Consulting Firms

(1) The Shift Toward Document Creation

Over the last few years, consulting firms have massively ramped up hiring to expand their businesses.

However, this has resulted in an increase in consultants who are more focused on document preparation rather than strategic planning.

As a result, there’s a growing gap between the image companies have of consultants and the actual role many are now playing.

Examples:

• Formal reports:
  Too much time is spent on creating formal reports and presentations, leaving less room for actual strategy formulation and execution support.
  
  I notice that young consultants often spend their time transforming their superior’s ideas into PowerPoint slides, which means their PowerPoint skills are excellent, but actual strategy work is lacking.
  

• Lack of practical experience:
  Despite their strategic thinking abilities, many consultants lack real-world business management experience.
  
  When new graduates enter consulting firms directly, this gap becomes inevitable.

4. The Importance of Internal Strategy

(1) Developing In-house Strategies

Companies should focus on developing their own strategies rather than depending on external consultants.

It’s essential for internal talent to formulate and execute strategies based on the company’s vision and mission.

Examples:

• Shared vision:
  When all employees share the company’s vision and goals, they can execute the strategy as one unified team.
  

• Increased engagement:
  By creating strategies in-house, employee engagement rises, leading to an overall improvement in organizational performance.
  

(2) Redefining the Role of Consultants

Consulting firms must go beyond mere document creation and provide hands-on support and specialized advice.

Companies should redefine how they utilize consultants to ensure they’re adding real value.

Examples:

• Providing expertise:
  Consultants should bring specific knowledge and expertise in areas critical to the business, supporting the execution of strategies.
  

• Execution support:
  Beyond strategy formulation, consultants should offer support during the execution phase and propose improvements where needed.

Conclusion

In this article, we examined the declining value of consulting firms as more companies hire former consultants from a human capital management perspective.

For companies, it’s crucial to prioritize internal strategy formulation and talent development while effectively utilizing consulting firms to achieve sustainable growth.

Moving forward, it’s important for companies to strengthen their competitiveness through human capital management and adapt flexibly to changing business environments.