Today, each one of us needs outside help from a ‘consultant’ for most areas of our lives. We visit doctors who consult us; we go to Vastu experts when building or renovating our homes; we go to a CA for filing our returns; and we have those who help us invest. We do this because these ‘outsiders’ offer us objectivity, expertise, and knowledge of the world around us, including how to maximize the value creation process.

Well, companies are no different! They also need ‘consultants’ to be successful in a dynamic, ever-changing world. Could anyone have thought how digital marketing would become the buzzword, more so, during Covid times?

Today, we find that consulting firms have already made a niche for themselves and offer specialized services in different domains. We have a plethora of experts available in areas like finance, marketing, taxation, IT, investment, and overall management. And these categories are not even the tip of the iceberg.

Before we discuss how consultancies can help businesses become successful, it is important to distinguish between small/ mid-size companies (many of whom are owner-driven) and large corporations, which are very layered and have multiple functions being performed by thousands of employees. Though different in design, culture, and revenue, there are a few areas where consultancies can benefit both kinds of companies.

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Before one gets into specific areas of benefits, here is an interesting story. It is from the movie called ‘Up in the Air’, where the actor George Clooney has been hired by a large corporation to go around the USA, terminating the employment of multiple employees. Normally, this would have been done by the HR team, but the company chose to enlist the services of an external consultant, who was good with people and displayed the right amount of empathy for the task he had been entrusted with.

Here are the specific benefits offered by consultancies:

* Cost-effective

Believe it or not, most companies seem to believe that hiring a consulting firm is expensive. That is incorrect. For sure, there is an initial investment to be made, but working with an ‘outsider’ may be more cost-effective. Imagine if there were a whole team of people, earning monthly salaries, who were doing the task entrusted to an outsider/ consultancy. The external partner comes in, does what is required for a fee, and moves on without any regular salary. Do the math for yourself in your own company and the results will surprise you!

* Domain expertise

How many new functions can a company create? How many new people with diverse skills can it hire? An external consultancy has the requisite skill sets, and expertise and provides a much-needed external perspective as well. Generative AI, for instance, has recently gained popularity among professionals across functions but consultants have been tinkering with it for quite some time now. Their expertise in deploying AI to solve business problems efficiently and their ability to keep up with its ever-evolving nature ensures that their solutions are tuned to the latest developments.

* Objectivity

So many of us find ourselves caught up in the daily grind of our companies, that we tend to lose objectivity. This is best provided by an ‘outsider’ who is not emotionally attached to the business. This external consultant is far better equipped to tell companies the way it is, and often it is not something many managers, particularly owners/ founders would be willing to appreciate. Talk of belling the cat. Additionally, the consultancy also brings to the table cross-industry experience, not to mention the expertise that comes from understanding the macro-economic situation of beer. The consultancy is also uniquely positioned to enable building multiple skills in a client organization, once again because of their exposure to the outside world, in a non-judgmental way.

* Competitive advantage, customization and time-saving

Most employees in an organization are so caught up in accomplishing their daily tasks, that it becomes almost impossible to keep an eye on long-term strategic goals which may have been set. This is where consultancies can be invaluable, by ensuring that no one loses sight of the big picture.

Similarly, given that every company is unique, a ‘one shoe fits all’ solution will never work. A consultant is uniquely positioned to learn and understand the client beer from a third-party perspective and recommend customized solutions. By the same reckoning, new projects, research, and ideas can best be implemented by an external consultancy, because the company will not always be able to deploy teams from their existing staff towards these projects which are invariably of stragic importance. By using external resources for a short duration of time, companies also save on time.

There is, however, an onus on both the company and the consultancy, for the relationship to succeed. The consultancy will have to take the responsibility of delivery with impeccable execution. It must create constant value and have the metrics to measure the value delivered. The client must appreciate that there must be a true sense of partnership and transparency with the consultancy and that there are no secrets held back. The client should also appreciate that the initial investments may be on the higher side, but that the paybacks are bigger, for reasons already explained.

The fast-changing external environment is leading to a greater dependence on consultancies. Consultancies will have to constantly deliver on their promises. They have the knowledge, the tools, and the wherewithal, but flawless execution and continuous value addition are key. If the above is in place, there can never be a dispute on whether consultancies can help shape client business outcomes.

(By Atul Takle, Senior Partner, BOD Consulting. Views are personal)