Egypt needs strong management consulting services
Updated: Aug 12, 2019
Management consulting background goes back to the nineteenth century
When Arthur Dehon Little created the first consulting firm (Arthur D. Little) in 1886, he didn’t anticipate the huge positive impact that this new profession would have on the global economy. His main concern was to assist his clients by providing tailor-made solutions to solve their business problems. This new profession was quickly dubbed management consulting, as its main clients were the organizations’ top management and decision-makers.
During the first 50 years, consultants shaped the key aspects of the management consulting industry. McKinsey and company, created in 1928, is certainly the firm that has most contributed to the high level of recognition and prestige that management consulting firms enjoy today. At the end of this first phase, the management consulting industry was already draining many highly qualified individuals whose talent was harnessed by management consulting firms to deliver highly appreciated advisory services to their clients.
During the post-WWII economic boom, the impact of management consulting grew rapidly, particularly in large organizations that became industry leaders. Several major management consulting firms were created during this golden age for the world economy. We can mention the Boston Consulting Group (1963), Bain & Co. (1973) and Oliver Wyman (1984), which, along with McKinsey, are still considered undisputed leaders capable of delivering high-quality advisory services in virtually all business areas and all geographies.
"What made the success of management consultants was the scientific approach they adopted to solve their clients’ problems."
Consultants proposed complex plans considering many different elements, clients, costs and competitors, to name a few, which gradually became corporate strategy. As strategy grew into a key responsibility for management, leading management consulting firms began to specialize in strategy to distinguish themselves from other management consulting professionals specialized in a particular business area such as finance, operations, human resources or marketing.
Overall, management consulting continued to grow rapidly. In 2017, it represented $139 billion in revenue.
Organizations increasingly solicit the assistance of management consultants
Throughout its long existence – more than a century – management consulting has proven to be a key performance driver for leading companies. Consultants have become the privileged partners of successful businesses, performing different assignments such as strategic planning, and conducting transformation projects and post-merger integrations. Thanks to its role as a performance booster, the use of management consulting services is very common in all developed countries.
To showcase the impact of management consulting, we can mention how BCG helped to restructure American automakers General Motors, Chrysler and Ford, including the merger between Chrysler and Fiat. In 2008 the US federal government lent ($23.4 billion) to the auto industry on condition that the industry accept restructuring. The task force created for this purpose was recommended by the BCG, which resulted in several positive results. All three automakers survived and flourished, more than 340,000 jobs were created, and the bailout money was recovered.
The outcomes achieved by this consulting mission were disclosed because of its public nature, but otherwise, the confidentiality surrounding management consulting missions prevents the public from knowing about the role that consultants play in successful business operations.
Management consulting can create a lot of highly qualified jobs
In addition to being a booster for the economy, the management consulting industry is a great pool for job creation, particularly for fresh graduates. Along with tech, management consulting is the most attractive sector for fresh graduates, given its diversified and challenging environment. Leading firms such as McKinsey, the Boston Consulting Group and Bain are always highly ranked in the “Best place to work for” rankings, neck to neck with internet giants such as Facebook and Google. In France, 16.5% of fresh business graduates choose to start their career in a consulting firm.
Egyptian public authorities support the development of business advisory services
Conscious of the positive impact on the Egyptian economy that management consulting and advisory services in general would have, several public initiatives were launched to make them more accessible to small and medium-size enterprises (SMEs). For example, up to 95% of the cost of consulting services can be directly paid by the Industrial Modernization Center (IMC), which operates under the ministry of industry. Many public initiatives have been launched in recent years to assist fast-growing companies or startups.
Several funding solutions are also offered by international funds to help SMEs access consulting services. The pre-condition to being given access these services is formal registration with official financial statements.
All these initiatives will contribute to increasing the size and reach of consulting services in Egypt, which will, in turn, contribute to unleashing the potential of Egyptian companies.
Egyptian expatriates in GCC countries can help build a strong management consulting industry in Egypt
Egypt has the scale and the potential to become one of the leading economies worldwide, yet the consulting market in Egypt is still very small and widely unknown. Major consulting firms are assisting Egyptian companies out of their offices in GCC countries, mainly Dubai.
According to Source Global Research, between 54% and 62% of clients based in GCC countries say they will solicit consultants' assistance in 2017.
Dubai is another example showcasing the benefits of management consulting. The development of the GCC region in the last 20 years has required large numbers of consultants, whose assistance has contributed greatly to accelerating the growth of the region. Offering high quality of life and well served by international flights, Dubai attracted a large chunk of these consultants and became an international consulting hub serving GCC countries, and later expanded into Africa and South Asia. In 2017, the GCC management consulting market was estimated at $2.8 billion.
“With such great credentials and a success story in GCC countries, why is the management consulting industry still lagging behind in Egypt?”
The strategic partnership recently signed between Egypt and the UAE to transform Egyptian public services is a good example of how management consultant fosters knowledge transfer. Consultants in different areas will be responsible for transferring knowledge from the UAE to Egypt. They will select the best solutions, and adapt and explain them to their Egyptian counterparts. After validating the recommendations for each scope, a general roadmap will be defined and implemented to reach the expected modernization in the coming years.
Egyptian expatriates constitute a significant share of consultants based in the GCC. They could return to Egypt and help Egyptian companies become more competitive by bringing international standards of management. Those talents will contribute to building a strong management consulting industry in Egypt, which can become an additional source of foreign currencies, as consulting services can be easily exported to other countries. The cost advantage of Cairo versus Dubai is already driving investment firms to consider locating their regional offices in Cairo rather than Dubai. Building a talent pool in Cairo will drive international consulting firms to consider Cairo more seriously as a hub for its teams.
Aware of all the management consulting benefits of Egypt, we decided to relocate our consulting activity to Cairo and to open Stratexis. Thanks to our European experience in leading international consulting firms, we want the local consulting industry to grow and the performance culture to be diffused in Egypt. Many SMEs and family businesses need only top-level business advice to become large corporates following the successful examples of Orascom and Elsewedy.
After describing the benefits of management consulting on a national level, we will directly address business owners and decision-makers in upcoming articles to discuss:
the main barriers preventing the engagement of management consultants;
the expected benefits and why private organizations use management consulting services;
the best practices for a successful client/consultant relationship.
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