A fifth type that is emerging
is the sourcing advisory firm,
that advises buyers on sourcing choices related to insourcing, outsourcing, vendor selection,
and contract negotiations. The top 10 sourcing advisors (as ranked by the Black Book of Outsourcing) were TPI, Gartner, Hackett Group, Everest Group, PwC, Avasant, PA Consulting, and
EquaTerra. Although a fast growing sector, the largest sourcing advisory practices would
likely be classified as boutiques when considering the management consulting industry as a whole - with one of
the largest players, TPI, for example, citing 2006 revenues of less than US$150M during its acquisition by
Another method of
differentiation of consulting firms is on the basis of revenue model:
1. Based on time & effort:
Most firms charge only on a time & effort basis. They use case studies & past record to justify the
fees. e.g Mckinsey, BCG, etc.
2. Based on results delivered
only: Very few & usually small firms which have an excellent success rate charge on this
3. Combination of both: Many
of the larger firms take a part of the remuneration on the basis of delivered results. But usually the
variable component is only 20-30% of the total.
Management consulting is
becoming more prevalent in non-business related fields as well. As the need for professional and specialized
advice grows, other industries such as government, quasi-government and not-for-profit agencies are turning
to the same managerial principles that have helped the private sector for years.