Why a new consultancy company?

Officially launched today, Aldaba is proud to join the consultancy industry in the UK. We are a small team that focuses on public services.

Putting together the words ‘consultancy’, ‘small’ and ‘public services’ begs a question: why? This is particularly the case considering we are at the end of an era when Government has frequently trumpeted the millions of pounds it has saved on consultancy.

As a director of a new company, I could use this space to try and persuade you about the numerous reasons why it makes sense to go small in the current market: innovation, better tailored advice, greater focus, and reduced overheads, to name a few.

However, today I would like to reflect on just one of those reasons:

The Government’s tight approach to consultancy has resulted in the growth of smaller players who can adapt themselves to the market more flexibly

I find examining market fragmentation extremely difficult because there are no reliable data on the size of the consultancy market, let alone indications of how fragmented it is. I reckon the surveys by the Management Consultancies Association leave out more than a third of the income generated by the consultancy companies operating in the UK. This is probably the third of the market that is most relevant to smaller players.

Aside the difficulties around measuring the size of the opportunity, what we can more reliably establish is when the opportunity arose. In the late 2000s, the drop in consultancy fees caused much distress, with some of the bigger players frantically shipping personnel to the Middle East in the hope of making ends meet. However, once the shock was overcome, we started to see some changes I would describe as flexible adaptations.

It became obvious that ‘all in house’ was no longer practical. Consultancy companies started to think cleverly about how to purchase expertise and capacity to turn around the work quickly, but only when and if needed. The word ‘partnership’ became part of the vocabulary of those who used to dismissively raise their eyebrows when anyone dared to suggest they could not cope on their own.

If I was to give any credit to Government, I would not highlight the savings it has made on consultancy, not least because the calculations will need to be amended following the recent £220 million fine to the Home Office in connection with a badly managed contract termination.

Instead, I would highlight the effect that Government procurement has had on the consultancy industry:

Smaller players have developed an ability to tailor their services to the requirements of ever so tight projects.

In my opinion, they have been successful in doing this because they have stayed open to cooperation with others, including consultancy companies, universities, freelancers, charities, and social enterprises.

On the demand side of the equation, the public sector seems determined to consolidate a new trend which involves breaking down projects that used to be just below the £1 million mark into smaller pieces with the aim of making risk management easier. Last May, Sir Francis Maude gave his blessing to this trend by encouraging the public sector to bring projects closer to the capacity of smaller players. This is obviously good news for companies like Aldaba.

In general, I think the consultancy industry will be able to adapt itself to market trends quite effectively and flexibly so long as it stays open to effective cooperation with others.

I would be very keen to hear the views of those who have taken the time to read this blog.