4 types of management consulting firms
There are thousands of consulting firms and not every firm is the same. They differ in terms of their size, fees, remuneration, prestige, selection criteria, lifestyle, type of work and many other things. Below, we have divided the management consulting market into four types of players based on two key dimensions, the revenue per consultant and the number of consultants in a firm.
Small, specialized consultancies
With low revenue per consultant and a small number of consultant staff, small consultancies often offer a very specialized service to small and medium clients. They usually offer little in terms of interesting project work, prestige or remuneration, however, on average, they can offer a better work-life balance with better hours and more regional projects that do not require extensive travel.
With higher revenue per consultant and a small number of consultant staff, boutique consultancies also offer specialized services to small and medium clients usually within one particular industry or business function. However, they usually take up more impactful projects and are therefore able to attract a higher caliber of people and offer better remuneration. Lifestyle can be equally bad as it is at big strategy firms. Typical examples include Horvath and Partners, Simon Kucher etc.
On the other end of the spectrum, we have full-service and IT consultancies who employ a high number of consultants, averaging relatively low revenue per consultant. These firms usually offer long-term project support and implementation as well as outsourcing services but are rarely engaged in designing and strategizing large-scale transformations. Lifestyle tends to be good, whereas remuneration packages are significantly lower than for strategy firms or boutiques. Typical players include Accenture and IBM Global Services. A particular type of consultancy in this category are so-called in-house consultancies. It refers to the consulting arm, incorporated by multinational corporations, that works on projects across the firm. They should help decrease external consulting cost, disperse knowledge in the organization and offer bright people a consulting job to keep them within the corporation. In-house firms often compete but also collaborate with external consultants. Typical examples of in-house consulting firms include Deutsche Post DHL Consulting, Lufthansa Consulting, Bayer Business Consulting etc.
Lastly, a high number of consultants and high revenue per consultants is the domain of the strategy consulting firms. Due to their size, they are able to offer consulting services across all functions and industries. Those firms offer the highest salaries as well as prestige, the best pedigree of people, and most exciting and diverse projects. Lifestyle and work hours tend to be the worst among all types of consultancies. Examples include McKinsey, BCG, Bain, Strategy& and AT Kearney.