Why small could mean big in the GCC consulting market

We tend to take consulting firms' claims that they're dropping low-value clients in favour of a small number of big, high-profile, accounts with a pinch of salt. It's not that we don't believe them, it's just that we suspect it's never quite as binary as they make it sound, and is often being used as a way of telling us that their business is doing very well, without resorting to the usual weapons-grade metaphors. Like "booming", or "exploding".

What they're usually talking about, of course, is focusing on the big accounts rather than actively dropping the small ones, and that seems like an eminently sensible strategy. But, at a time when it feels as though consulting firms are having to place some big bets in the market - from a service, sector, and client perspective - there might be a bit more substance to the spin than that. Indeed, with success increasingly being determined by a firm's ability to win the small number of big transformation projects that exist in the market, being maxed out with small clients when a big one comes knocking could be very costly indeed.

It's a situation which comes into sharp focus in the GCC (Saudi Arabia, UAE, Oman, Bahrain, Qatar and Kuwait) where the consulting market is growing by about 20% and everybody (consulting firms and their clients alike) is fighting to get their hands on what little talent exists. The danger that you might have to turn a big client away is all too real, and when that client may be important to your firm globally, not just locally, the cost of doing so could be very high.

It's not, then, a surprise to hear GCC consulting leaders talking about dropping their smaller clients. What's more surprising is the extent to which it's happening: this is something we've heard virtually every big firm talking about over the course of the last few months, and in some cases the numbers of clients they're talking about dropping are eye-watering. Backing that up was a story we heard recently of a client who'd issued an RFP to several firms and had no responses.

We think that's significant, for two reasons: firstly, although the GCC is a high-growth market, you have to wonder if there are a sufficient number of high-value clients (let alone high-value projects) to sustain the regional business of every major consulting firm on the planet. It feels like a bet, and if it is then some firms are surely going to lose.

Secondly, and perhaps more intriguingly, it suggests that the needs of many mid-market clients in the GCC are about to be ignored. Assuming the needs of those clients above aren't going to disappear, who's going to serve them? Local firms? There aren't many of those and the firms that exist don't have access to the knowledge, network and scale that make the world's leading consulting firms such attractive suppliers to the region's growing businesses.

You might imagine this creates the perfect opportunity for Tier 2 firms to enter the GCC consulting market, but that ignores the importance of brand to GCC clients, not to mention the fact that they, too, need scale sometimes.

More likely, we suspect, is a scenario in which the big firms realise that they've made themselves hostages to fortune, that some of them are losing their bets, and that a whacking great opportunity exists to serve mid-market clients who may well be the blue-chips of the future anyway. And change their strategy. Indeed, its notable that in at least one case a firm that's telling us it's dropping mid-market clients in the GCC has recently talked of its intention to target them elsewhere.

We suspect the smart firm will be the one that finds a way to serve both types of clients. That means consulting firms which have the capacity to handle both, and, in a market starved of talent, that probably means consolidation. Funny, isn't it? Whichever way you look at the consulting market at the moment, you end up concluding that the big firms will get bigger.