Can Management Consulting Be Outsourced?

Good news for management consultants: apparently you all do have a purpose in life after all! According to Slate, a World Bank-Stanford study—in conjunction with Accenture—"randomly selected a set of textile factories in India to receive a complimentary five-month management makeover and compared the profitability and efficiency of these revamped factories with a control group of factories that continued doing business as usual."

The results: the randomly selected group of factories improved significantly. Specifically: "The consultants boosted productivity by around 10 percent by improving quality, managing inventory, and speeding up production."

No real surprises there, given that the textile factories had had very little in the way of professional management expertise in the first place. Also unsurprising: the reason that many companies in developing economies don't hire management consultants is that the cost of doing business can seem prohibitive.

Which makes the solution proposed near the end of the piece seem all the more obvious: create more business schools in the developing economies, so that local companies—or giant professional services conglomerates—have access to a talent pool of well-trained managers and consultants that businesses in the local community can actually afford.

Of course, the next stage of that debate then begins to affect the U.S. market. The Slate piece ends with observations about how professionalizing companies in developing economies would inevitably lead to them becoming "the corporate bureaucracies we so love to hate in America." Assuming that that becomes the case, the history of globalization suggests that the next step would be those lower-cost managers and consultants coming to compete in Western markets, and driving down the cost of consulting services.

The management consulting industry upended because of lower-cost competition from foreign markets. Now wouldn't that be an ironic twist?

--Phil Stott, Vault.com