4. Market analyses

«The main advantages of external consultants are objective and independent view on the problem, an integrated approach to problem solving, an opportunity for companies to gain experience, minimizing their own mistakes.

Mission of consulting is to facilitate the effective development of business through the development and implementation of effective tools and mechanisms for conducting business in practical activities of client companies ²⁹.»

Consulting - a professional help from outside professionals to managers and managerial staff of various organizations in analyzing and solving problems of their functioning and development. Before developing the business plan for the consulting company the author developed a research of consulting industry with focus on Russian market. The main task of this Chapter is to discover potential and trends on the Russian consultancy market.

4.1. World’s industry outlook

In the last decade the market of consulting services is one of the fastest growing markets in the world. Its growth is 15 - 20% a year, that 2 - 3 times more then the market growth of food production³⁰.

In the world there are about 1720 firms specializing in management consulting. Taking into account number of specialists and the amount of the annual turnover of services 40 companies from this number can be considered as large, 180 firms - average, and 1500 companies - small. The world market for management consulting services at the same time is divided as follows: 40 largest consulting firms serving 66% of the market, 180 medium-sized firms - 25%, 1500 of small firms - 9%. A large firm has from 300 to 30,000 professionals and annual revenue from $ 68 million to $ 3 billion. A middle-sized company employs from 50 to 300 professionals generating annual revenue up to $ 20 million. A small firm is a firm which has average about 4 professional consultants and an annual income not more than 0,5 million dollars³¹.

4.2. Economic trends affecting consulting services in Russia

Following trends in the Russian economy contribute market development of consulting services:

1. The increase in general client’s credit quality.

2. Appearing of younger a progressive managerial personnel who is aware of the need to develop modern management techniques and the importance of an integrated approach to problems solving. In contrast to them the old management team had a "productive" thinking and did not understand the essence of management consulting.

3. The growth of attention of the shareholders to the market value of the company, not just net income, leads to the need to increase intangible assets, namely, staff development, strategy development, increase the value of the brand, etc.

4. Previous economic growth, characterized by: increasing competition, causing the need to develop strategies, marketing mix, etc.; the redistribution of property, causing the need for restructuring.

5. Structural changes in the economy

6. Globalization - the foreign companies that come to the Russian market absolutely need consultants with a knowledge of the Russian specificity.

7. Entrance of domestic companies to world markets is causing them to hire consultants who can help to be competitive on the international market.

8. Developing partnerships between Western and Russian companies, which will bring the experience and technical development of one with knowledge of Russian realities and practices of others.

9. The rapid growth of consulting in the field of personnel management is due to the restructuring of management, which is virtually impossible without the skilled personnel.

10. On the consulting market a new category appeared - business integrator - firm providing a comprehensive range of services to improve customers' business processes through information technology.

11. Regional networks today are developed not only by large companies. Many mid-sized firms are beginning to integrate into networks - regional, or even all-Russian.

These trends become the reasons of growth in consulting services in Russia that allow assuming about great potential of consulting industry.