Inside Jobs: the French market and the rise of in-house consulting

Competition is fierce in the French consulting market, where a sluggish economy means clients are putting intense pressure on prices and are reluctant to make big investments.  But while firms are busy battling it out for their share of hard-to-find business, they may do well to consider the possibility that the real threat to their survival comes not from each other but from their clients. That’s because with tight budgets and lots of work to do, businesses are increasingly looking to their own staff to do work that would traditionally have gone to consulting firms.

The trend is inexorably linked to France’s flagging economy and worker-friendly labour laws -- even when times are tough (as they undoubtedly have been), it’s not easy to get rid of people, and for clients who are not as busy as they’d like and find themselves suddenly swimming in excess staff, it makes sense to reassign the would-be-redundant to new projects -- projects that would otherwise have meant calls to consultants.

Where it’s borne solely out of an attempt to make a virtue of necessity, this may well be a temporary issue: as the French economy picks up, it’s likely that many of the excess workers who became internal consultants will be needed back at their old posts, and normal use of consulting will resume.  But a bigger, more long-term threat looms -- and it’s one that has the power to permanently transform the French consulting landscape.  Some French organisations, eager to find alternatives to the notoriously pricy traditional consulting market, have begun to build consulting practices in-house out of choice. They’re much less interested in how they move people back out of the internal consulting division and much more interested in how they get people to move in. If they figure out a way of doing so sustainably,  the future could see some of the biggest and most lucrative consulting projects never leaving their client businesses.

Just as in-house legal departments forever changed the face of law in the 1980s, the same could now be happening to the world of French consulting.  Granted, this phenomenon isn’t restricted to France -- we’re seeing the same thing happen in Germany, the US, and other markets, too. And neither is it completely new: the story of what is now Atos Consulting has its roots in internal consulting, and aptly testifies to the cyclical nature of the trend. Sooner or later, these divisions start looking for work elsewhere, and when they find enough of it, they leave their host to become a fully-fledged consulting firm in their own right. But the tough French economy, and a growing appreciation of the idea that organisations need to adapt to a new normal, could be accelerating the trend and encouraging business leaders to find ways to make it stick.

As in law, the allure of moving in-house will likely hinge on increased stability and improved work-life balance outweighing any attendant drop in pay. But the difference in pay isn’t what it used to be anyway, and for French consultants, who may be in unprofitable practices with little opportunity to move up or out to a traditional competitor, in-house opportunities may look sweet, indeed.