Consultant
Sept 2007
Report on the FEACO meeting in Budapest
Interview : Jankos Arah
President of AMCOS (Slovenian Federation of Management Consultants)
AMCOS is the Association of Management Consultants of Slovenia. In 2003 AMCOS organized the FEACO conference in Ljubljana. In 2004 the conference was held in Athens where Janko Arah, the AMCOS President was interviewed and gave his viewpoint to ConsultingNewsLine. This year again in Budapest, where the FEACO conference was held with the help of VTMSZ, the hungarian association of MC firms, Janko Arah allows us for a private talk focusing on the development in Eastern Europe, the entry of new european members and the currency swap to Euros in Slovenia. We are very indebted to him for this pleasant moment and for his most recognized knowledge on eastern topics
Dear Janko, thank you to welcome ConsultingNewsLine again. How is the consultancy sector going at the moment ? Figures presented at the meeting were quite positive, especialy for Slovenia and most central european states.
Janko Arah : Well, according to official reports things are going very well. But in Slovenia we are preparing the currency swap due to happen on January the 1rts 2007, so it is not that easy. For the past year we have had a 3,4% growth and our expectations are that we should have almost a 5% increase for 2006. So we are happy somehow but for the next year we can’t expect this result. It should be certainly less… say 3% or so for the official figures.
You speak of official figures. Does it mean that the reality is quite different from the declared data?
Janko Arah : Consulting in Europe is about 10% increase (8.6 in 2005) so the forcast for the members is good despite the fact that the data are not reliable. We dont cover all the markets. In the East as well as in Slovenia we have foreign companies that are coming with their own consultants working on their projects that we dont account for. Some from France, Greece... They will work directly with ministries like the agriculture. A.T. Kearney for instance works with state owned companies or company that are going public. So the developping field is addressed by members of the consulting community that are not registrated in the country and for that reason we dont know realy much about their figures.
So if I do recollect your data basicaly you switched from 4% (GDP) and 8,5% (MC) in 2005 to 5% (GDP) and 10% (MC) in 2006 with the expectation that this might slow down slightly in 2007, a year that starts with the currency swap from Slovenian Tolar to the Euro. How is it for the other Estern European countries ? Is the growth and the slow down a purely slovenian fact?
Janko Arah : About the growth it is in fact quite general in central european countries. And it is the reality for Slovenia. In Slovenia at the moment we benefit from investment by Italy, Austria and Germany, mainly... with companies investing such as Inter Spar, Spar...but their consultants are not Slovenians, they have their own management consultants for restructuring the companies they buy. It is good in term of activity but we defenitly dont know their data. That is a first point. But there is another point : it is to be understood that those companies are incorporated in their own countries so for statistics purposes it would add to the management consultancy overall market if we try to integrate their activity, so better not. So globaly the data are reliable. We may say consulting is going well in Europe and Central Europe is developping, but the amount of cross activity is not accounted for in all countries. Yesterday I presented Slovenia ant Czech Republic figures for the 2004-2005 period and 2005-2006. The turn-over presented were not compatible with the present growth given officialy for the consulting activity. So the local basis are definitly not reliable.
If we let the quality of the data apart and if we try focus in a more qualitative way to the development in central european countries, what comes first to your mind?
Janko Arah : I would say Romania, Czech Republic and Poland come first. In 2004 they accounted for a 30% increase in Management Consulting (MC) when their global economy was between 10 to 15% of growth in GDP. But again my concern is that they can’t really estimate their real market because of the numerous management consultancies that are not incorporated. So the figures according to me were probably higher. So it makes the slightly lower 2005 figures difficult to explain. And the delta is so high that we dont know if there is growth or not. So it is difficult to let the quality of the data apart.
Whatever the growth, how is the mangement consulting field developing in Central Europe, in term of its own organization?
Janko Arah : National associations are existing evrywhere and now the joining countries are better organized in term of management consulting associations. This will enable them to become rapidly members of the FEACO in 2007. Exemple : Estonia and Latvia. They represent about 8% of the Csech market. The Cech market is going well. I visited Praha twice and know them quite well. But most consultants dont want to unify and they have good reasons to keep the organizations they set-up. So for them the integration into FEACO is not in the agenda .
Might the FEACO help in this process?
Janko Arah : Good question. We have made advisory comitee in Croatia for instance. Two associations came to the FEACO meeting and we asked them to know who could be representative. They merged and became a current member of the FEACO. However it is difficult to get the same with the Czech. In Croatia it was easier because we were in a position to say that you wont integrate if you dont merge.
What about the Offshoring process. Is it still continuing and does it account for the rapid development?
Janko Arah : Offshoring in eastern countries is going fast evrywhere. And we do also offshore our own activities. And this is new. So West offshores to Central and Central offshores to the East. This is interesting. Many like Poland and Hungary come down to Bulgaria, Romania and Macedonia...Two days ago we have had a MACONET meeting (12 former eastern countries), within a group that was created 3 years ago in Poland. Last year we met in Slovenia and this year it was in Budapest. With this group we share data and MC policies. And we observed that Polish and Hungarians were doing quite a lot of MC in Romania, Bulgaria, Macedonia, and Bosnia too, I mean in areas that were traditionaly operated by greek consultancies. Some powerfull MC companies are also outsourcing their IT activity from Slovenia to Serbia, and IT is not the only sector concerned. For instance « Profile », which is a local slovenian owner, has outsourced very well his HR activity in Belgrade (Serbia). So the work is hoping. Local actors in Slovenia have grown up so much that they also outsource their own activity. As I said IT is not the only sector concerned.
What is the reason to outsource and to offshore activities in these East European countries and not in China or India as many large international IT firms do?
Janko Arah : Compared to China or other places there is less time lag due to geographic proximity. Whats more there is the masterising of languages. In Romania you find easily people speaking a good french. Another good reason why they are not offshoring to South East Asia is historical. All former Eastern Europe countries belonged to tha same Block. Polandn Czech republic etc are linked by former bonds so they prefer not to offshore to Asia. So it is realy what we call "Right shoring".
So Rightshoring is taking some work out of the country. What are the new opportunities in Slovenia that would compensate for this drain?
Janko Arah : In 24 November 2007 we will get in Slovenia new opportunities resulting from the fact that the Chamber of Commerce, which is a 160 years old institution, will stop its obligatory membership. It will be somekind of a "liberalization" of the membership. So companies will join volontarily and will have the choice beteween new and competing associations. We should have more than half existing members that would leave to join new associations. New associations will be allowed by a new law to manage their fields For AMCOS this will have consequences. With our 90 members we shall continue to exist but our scope will also be different. We will be cleared to focus on national questions. So far we restricted most of our policy activity to foreign questions. We had activities at an international level with Bosnia for instance. But domestic questions were dealt with by the Chamber of Commerce. This will stop and we will enlarge our responsability. It is going to take a big change for AMCOS and we will have to listen more to our members. The problem of added value will be raised. To which extent can we be usefull to our members. Most are small consultancies. So we will have to define the future needs of these small MC firms.
What might be those new responsabilities for your association? In detail I mean...
Janko Arah : About the needs I would say : 1) to provide regulatory information, say on a monthly basis, and this on the market development in Slovenia as well as abroad. 2) Organize training seminars, education and support to the development of highly skilled consultants. We had this offer 10 years ago but it disappeared when we focused on international questions. So we need schools and labels. In Bled we have a Management Shool that might be a starting point. But we have no labels yet. We spoke about this 3 years ago with a representative person from ICMCI. But at that time we refused their protocole mainly because we are too small. So we gonna have to think again on that topic and link it with seminars. Methodology standards might be set-up by branches : HR, IT... For IT we do have a dedicated association, so on our side it would mainly concern the best MC practices and standards that go with the IT deployment. 3) Setup conferences to exchange more than we do. It is different here from what we see in the west, people like here to share experiences and we can get data easily. It has become realy transparent. So this should not be too difficult to set it up. 4) Develop networking at a national and international level. Also do things for pleasure, with tournaments, meeting...
So, big opportunities for MC support activities. School directors and certification bodies should take a look on that side of the Alps. Before coming to our conclusion remarks, may we get back to the currency swap. Is it going to bring its own opportunities or will it be a temporary burden?
Janko Arah : In fact we started to prepare for the swap 3 years ago and we have very good local domestic IT firms to handle the problem : PerfTech, SOAP, TechnoTech, KPMG, Ernst &Young, SIGEM... and they started preparing the software alignment 2 years ago . So we will have 15 days to swap. But we are ready now. We will change on January 1st 2007 . This should not add to the activity next year. However this is for us an opportunity to transfer our knowledge and Know how to state members who will have to swap when their turn will come in the next years.
And the conclusion would be, if we had to retain just one idea for Slovenia and the East as a whole?
Janko Arah : Slovenia was the opportunity 3 years ago when we had this FEACO meeting in Ljubljana. We were in 2003 and Slovenia was to enter the European Union in May 2004. Now it is the turn to new members : Bulgaria, Romania, Serbia... For us Croatia will be an opportunity, it is close to Slovenia. Consultants will be able to assess those opportunities at the next FEACO meeting which is to be held in Warsaw Poland (october 2007). They will have the opportunity to visit the new areas in the year. Opportunities are many but you have to assess them according to your own activity. The actual growth in the East gives room to do it. You must also evaluate the social and cultural opportunities and not only the short term profits.
Words collected by Bertrand Villeret
Editor in chief, ConsultingNewsLine
at the Gellert Bath in November 2006
Whoswoo :
Janko Arah
Slides from lecture in Budapest :
SPECIALITIES OF MANAGEMENT CONSULTING IN NEWLY JOINED
AND CANDIDATE COUNTRIES
Images :
B. Villeret pour ConsultingNewsLine. Copyright B. Villeret / Quantorg 2006
Copyright
RH&M 2006 - 2007Sept 2007
Report on the FEACO meeting in Budapest
Interview : Jankos Arah
President of AMCOS (Slovenian Federation of Management Consultants)
AMCOS is the Association of Management Consultants of Slovenia. In 2003 AMCOS organized the FEACO conference in Ljubljana. In 2004 the conference was held in Athens where Janko Arah, the AMCOS President was interviewed and gave his viewpoint to ConsultingNewsLine. This year again in Budapest, where the FEACO conference was held with the help of VTMSZ, the hungarian association of MC firms, Janko Arah allows us for a private talk focusing on the development in Eastern Europe, the entry of new european members and the currency swap to Euros in Slovenia. We are very indebted to him for this pleasant moment and for his most recognized knowledge on eastern topics
Dear Janko, thank you to welcome ConsultingNewsLine again. How is the consultancy sector going at the moment ? Figures presented at the meeting were quite positive, especialy for Slovenia and most central european states.
Janko Arah : Well, according to official reports things are going very well. But in Slovenia we are preparing the currency swap due to happen on January the 1rts 2007, so it is not that easy. For the past year we have had a 3,4% growth and our expectations are that we should have almost a 5% increase for 2006. So we are happy somehow but for the next year we can’t expect this result. It should be certainly less… say 3% or so for the official figures.
You speak of official figures. Does it mean that the reality is quite different from the declared data?
Janko Arah : Consulting in Europe is about 10% increase (8.6 in 2005) so the forcast for the members is good despite the fact that the data are not reliable. We dont cover all the markets. In the East as well as in Slovenia we have foreign companies that are coming with their own consultants working on their projects that we dont account for. Some from France, Greece... They will work directly with ministries like the agriculture. A.T. Kearney for instance works with state owned companies or company that are going public. So the developping field is addressed by members of the consulting community that are not registrated in the country and for that reason we dont know realy much about their figures.
So if I do recollect your data basicaly you switched from 4% (GDP) and 8,5% (MC) in 2005 to 5% (GDP) and 10% (MC) in 2006 with the expectation that this might slow down slightly in 2007, a year that starts with the currency swap from Slovenian Tolar to the Euro. How is it for the other Estern European countries ? Is the growth and the slow down a purely slovenian fact?
Janko Arah : About the growth it is in fact quite general in central european countries. And it is the reality for Slovenia. In Slovenia at the moment we benefit from investment by Italy, Austria and Germany, mainly... with companies investing such as Inter Spar, Spar...but their consultants are not Slovenians, they have their own management consultants for restructuring the companies they buy. It is good in term of activity but we defenitly dont know their data. That is a first point. But there is another point : it is to be understood that those companies are incorporated in their own countries so for statistics purposes it would add to the management consultancy overall market if we try to integrate their activity, so better not. So globaly the data are reliable. We may say consulting is going well in Europe and Central Europe is developping, but the amount of cross activity is not accounted for in all countries. Yesterday I presented Slovenia ant Czech Republic figures for the 2004-2005 period and 2005-2006. The turn-over presented were not compatible with the present growth given officialy for the consulting activity. So the local basis are definitly not reliable.
If we let the quality of the data apart and if we try focus in a more qualitative way to the development in central european countries, what comes first to your mind?
Janko Arah : I would say Romania, Czech Republic and Poland come first. In 2004 they accounted for a 30% increase in Management Consulting (MC) when their global economy was between 10 to 15% of growth in GDP. But again my concern is that they can’t really estimate their real market because of the numerous management consultancies that are not incorporated. So the figures according to me were probably higher. So it makes the slightly lower 2005 figures difficult to explain. And the delta is so high that we dont know if there is growth or not. So it is difficult to let the quality of the data apart.
Whatever the growth, how is the mangement consulting field developing in Central Europe, in term of its own organization?
Janko Arah : National associations are existing evrywhere and now the joining countries are better organized in term of management consulting associations. This will enable them to become rapidly members of the FEACO in 2007. Exemple : Estonia and Latvia. They represent about 8% of the Csech market. The Cech market is going well. I visited Praha twice and know them quite well. But most consultants dont want to unify and they have good reasons to keep the organizations they set-up. So for them the integration into FEACO is not in the agenda .
Might the FEACO help in this process?
Janko Arah : Good question. We have made advisory comitee in Croatia for instance. Two associations came to the FEACO meeting and we asked them to know who could be representative. They merged and became a current member of the FEACO. However it is difficult to get the same with the Czech. In Croatia it was easier because we were in a position to say that you wont integrate if you dont merge.
What about the Offshoring process. Is it still continuing and does it account for the rapid development?
Janko Arah : Offshoring in eastern countries is going fast evrywhere. And we do also offshore our own activities. And this is new. So West offshores to Central and Central offshores to the East. This is interesting. Many like Poland and Hungary come down to Bulgaria, Romania and Macedonia...Two days ago we have had a MACONET meeting (12 former eastern countries), within a group that was created 3 years ago in Poland. Last year we met in Slovenia and this year it was in Budapest. With this group we share data and MC policies. And we observed that Polish and Hungarians were doing quite a lot of MC in Romania, Bulgaria, Macedonia, and Bosnia too, I mean in areas that were traditionaly operated by greek consultancies. Some powerfull MC companies are also outsourcing their IT activity from Slovenia to Serbia, and IT is not the only sector concerned. For instance « Profile », which is a local slovenian owner, has outsourced very well his HR activity in Belgrade (Serbia). So the work is hoping. Local actors in Slovenia have grown up so much that they also outsource their own activity. As I said IT is not the only sector concerned.
What is the reason to outsource and to offshore activities in these East European countries and not in China or India as many large international IT firms do?
Janko Arah : Compared to China or other places there is less time lag due to geographic proximity. Whats more there is the masterising of languages. In Romania you find easily people speaking a good french. Another good reason why they are not offshoring to South East Asia is historical. All former Eastern Europe countries belonged to tha same Block. Polandn Czech republic etc are linked by former bonds so they prefer not to offshore to Asia. So it is realy what we call "Right shoring".
So Rightshoring is taking some work out of the country. What are the new opportunities in Slovenia that would compensate for this drain?
Janko Arah : In 24 November 2007 we will get in Slovenia new opportunities resulting from the fact that the Chamber of Commerce, which is a 160 years old institution, will stop its obligatory membership. It will be somekind of a "liberalization" of the membership. So companies will join volontarily and will have the choice beteween new and competing associations. We should have more than half existing members that would leave to join new associations. New associations will be allowed by a new law to manage their fields For AMCOS this will have consequences. With our 90 members we shall continue to exist but our scope will also be different. We will be cleared to focus on national questions. So far we restricted most of our policy activity to foreign questions. We had activities at an international level with Bosnia for instance. But domestic questions were dealt with by the Chamber of Commerce. This will stop and we will enlarge our responsability. It is going to take a big change for AMCOS and we will have to listen more to our members. The problem of added value will be raised. To which extent can we be usefull to our members. Most are small consultancies. So we will have to define the future needs of these small MC firms.
What might be those new responsabilities for your association? In detail I mean...
Janko Arah : About the needs I would say : 1) to provide regulatory information, say on a monthly basis, and this on the market development in Slovenia as well as abroad. 2) Organize training seminars, education and support to the development of highly skilled consultants. We had this offer 10 years ago but it disappeared when we focused on international questions. So we need schools and labels. In Bled we have a Management Shool that might be a starting point. But we have no labels yet. We spoke about this 3 years ago with a representative person from ICMCI. But at that time we refused their protocole mainly because we are too small. So we gonna have to think again on that topic and link it with seminars. Methodology standards might be set-up by branches : HR, IT... For IT we do have a dedicated association, so on our side it would mainly concern the best MC practices and standards that go with the IT deployment. 3) Setup conferences to exchange more than we do. It is different here from what we see in the west, people like here to share experiences and we can get data easily. It has become realy transparent. So this should not be too difficult to set it up. 4) Develop networking at a national and international level. Also do things for pleasure, with tournaments, meeting...
So, big opportunities for MC support activities. School directors and certification bodies should take a look on that side of the Alps. Before coming to our conclusion remarks, may we get back to the currency swap. Is it going to bring its own opportunities or will it be a temporary burden?
Janko Arah : In fact we started to prepare for the swap 3 years ago and we have very good local domestic IT firms to handle the problem : PerfTech, SOAP, TechnoTech, KPMG, Ernst &Young, SIGEM... and they started preparing the software alignment 2 years ago . So we will have 15 days to swap. But we are ready now. We will change on January 1st 2007 . This should not add to the activity next year. However this is for us an opportunity to transfer our knowledge and Know how to state members who will have to swap when their turn will come in the next years.
And the conclusion would be, if we had to retain just one idea for Slovenia and the East as a whole?
Janko Arah : Slovenia was the opportunity 3 years ago when we had this FEACO meeting in Ljubljana. We were in 2003 and Slovenia was to enter the European Union in May 2004. Now it is the turn to new members : Bulgaria, Romania, Serbia... For us Croatia will be an opportunity, it is close to Slovenia. Consultants will be able to assess those opportunities at the next FEACO meeting which is to be held in Warsaw Poland (october 2007). They will have the opportunity to visit the new areas in the year. Opportunities are many but you have to assess them according to your own activity. The actual growth in the East gives room to do it. You must also evaluate the social and cultural opportunities and not only the short term profits.
Words collected by Bertrand Villeret
Editor in chief, ConsultingNewsLine
at the Gellert Bath in November 2006
Whoswoo :
Janko Arah
Slides from lecture in Budapest :
SPECIALITIES OF MANAGEMENT CONSULTING IN NEWLY JOINED
AND CANDIDATE COUNTRIES
Images :
B. Villeret pour ConsultingNewsLine. Copyright B. Villeret / Quantorg 2006
pour ConsultingNewsLine
All rights reserved
Reproduction interdite
