Consultancies are, in many ways, similar to private military companies in the context of conflict
Since the surge of the neoliberal global order, in which most domains of society were handed over to the private sector, consultancy groups have made tremendous inroads. Known for their expertise, efficiency, and professionalism, these firms are hugely popular amongst both private businesses as well as government bodies — which contract them to improve internal operations, execute certain projects and revitalize organizational culture. Despite their shiny reputations, however, it is unclear what exactly they do — or whether they even generate any net benefit for society. Firms frequently discover the same problems propping up soon after their consulting partners have ‘completed’ their assignments, and governments have experienced dwindling levels of capacity due to having developed a pathological dependency on them. What is going on?
Consultancies are, in many ways, similar to private military companies in the context of conflict. When governments hire PMCs, they do so on a contractual basis — with specific tasks to be achieved within a certain timeframe. The trouble, of course, is that for these organizations, the primary objective is not to merely fulfill the terms of the agreement, receive their payments, and go home, but to achieve the bare minimum and use time ‘in the field’ to identify new problems that can be highlighted to serve as the basis for further contracts. This is not a problem specific to the consulting domain but can be observed in the non-profit sphere, mental health sector, fast food industry, among many others whose modus operandi is to generate ‘repeat customers’ via strategic hooks — whether that be in the form of political clout back home, addictive items such as sugars, or medication designed to foster dependencies.
Breaking down the internal hierarchies of management consultancies, one observes an interesting pattern. Almost all employees are young, conventionally presentable, and graduates of elite colleges. Most of them hail from privileged backgrounds and simply do not have the patience to ‘climb up the corporate ladder’ in a gradual manner. Instead, they wish to preserve and enhance the prestige/exclusivity of their higher education institute: and what better way to achieve this than to jump into a consultancy gig that is both extremely high paying and grants them a ‘brand’ to flash on their resume? This works out incredibly well for the employers as well, who can rest assured that these ‘stylish’ young folks will be able to swiftly execute basic tasks such as coordinating meetings, putting together slides, cleaning up data, designing fancy infographics, and speaking to clients with an air of confidence (read: entitlement) — all of which collectively create the impression of ‘something important’ going on.
What is perhaps even more bizarre is that the client organization that hired this consultancy’s services is thinking along virtually the same lines: that it will be able to peacock to competitors about having received the most ‘cutting edge’ technical assistance from [insert an appealing consulting brand name here] — indicating that a) it can afford it, and b) it has some information that the competitor doesn’t. Feeling sidelined, the competitor will then hire a consultancy of similar stature simply to engage in this mindless status-signalling game — regardless of whether it requires such intervention. All throughout this elaborate process, the essence of the matter — namely a firm attempting to sell a product or service in the market — is completely forgotten, replaced by empty theatrical performances.
On the other hand, governments in the post-Cold War epoch are major consumers of consulting services. Outsourcing various functions to the private sector, particularly consultants, the Executive’s role has been reduced to a simple procurement agency. Over time, this has slowly chipped away at institutional capacity and brought consultants from the sidelines — where they once were and offered actual value — to the fore. More than simple advisory services, consultants now run the show: tackling everything from generating contractual terms to producing publicity materials for completed ‘projects’ (that hardly anyone understands the efficacy of) — all while government functionaries are relegated to ceremonial roles that serve little purpose other than to grant permissions and ‘facilitate’ the process.
The justification for this entire charade is that consultants bring ‘expertise’ into the mix: they are trained professionals that can ‘get the job done’ in as efficient a manner as possible. But can that be true? McKinsey, one of the big management consulting firms in the world today, operates in over twenty unique industries — including but not limited to retail, energy, education, healthcare, agriculture, real estate, and even defense/aerospace! In many instances, consulting groups are involved in spaces that would seem diametrically opposed to one another — like the fossil fuel industry on the one hand and the Environmental and Social Governance (ECG) domain on the other. Indeed, the bigger the consulting group, the less specialized it is likely to be. So much for technical ability! According to economist Mariana Mazzucato, consultants continue to get hired despite their lack of expertise because a) their prestigious rubber stamps on various initiatives add credibility, and b) in order to avoid pressure/accountability for ‘tough choices’ (like downsizing) or when things go wrong. Generally speaking, the former is more applicable to government outsourcing while the latter is more relevant for private firms.
One explanation for the rapid expansion of the consulting industry — estimated at around $1 trillion globally — is that as increasing numbers of companies enlisted as publically traded corporations, share prices began to dominate as the primary indicator of success. C-level executives thus altered their strategic orientation for improving business functions: moving away from a trial-and-error, or learning-by-doing, approach to one based on shortcuts that would enhance the organization’s prestige and create the impression of competence — even if there wasn’t any. The best way to achieve this was by hiring consultants, who would come in with an established brand name that would inevitably raise share prices regardless of what they did. In other words, the objective would essentially be achieved when contracts were signed. Just the affiliation itself was enough to send a positive signal through the market.
The growth of consulting is not a harmless development. Au contraire, firms in this domain have crippled government and swindled businesses for over four decades. Their expansion is indicative of a deep crisis in our economies, which now seem to be running on impressions and appearances rather than the generation of real value. How long before it all combusts?
The writer is a Research Fellow at the Pakistan Institute of Development Economics.
Published in The Express Tribune, July 16th, 2023.