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An In-depth Study on the Management Consulting Services Industry In the Philippines

Submitted by:

Mr. Edgardo Bolinao Project Head

and

Ms. Ma. Theresa Mosquito Senior Researcher

August 17, 2001

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Table of Contents page List of Tables ii List of Appendices iii Executive Summary vi Introduction 1 1. The industry 2 1.1 Definition 2 1.2 Industry Structure 5 1.2.1 Global Management Consulting Services Industry 6

1.2.2 Philippine Management Consulting Services Industry 20 2. Forward Linkage/Market 46 3. Backward Linkage/Suppliers 52 4. Laws Hindering/Facilitating 55 4.1 Philippine Laws and ADB Policies 55 4.2 Commitments under GATS 58 5. Market Potential/Foreign Market Demand and Competition 60 5.1 Entering Foreign Markets 60 5.2 Extent of Services Rendered Abroad 63 5.3 Foreign Market Demand and Competition 64 6. Supply Capability 66 6.1 Services Offered 66 6.2 Areas of Specialization 67 6.3 Expertise/Technical Competence of Manpower 68 6.4 Existing Association 73 7. Industry Training Needs 75 7.1 Quality and Quantity of Training 75 7.2 Identification/ Listing of Training Needs 75 8. Opportunities and Threats 77 8.1 Opportunities 77 8.2 Threats 78 9. Summary of Issues and Confronting the Management Consulting

Industry 79

10. Action Plan Enhancing Competitiveness 85

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10.1 Recommendations 85 10.2 Performance Monitoring Scheme 94 11. Directory 97 References 104 Appendices 106

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List of Tables Page Table 1 Scope and Definition of the Management Consulting

Services Subsector based on UN CPC Provisional Code and Version 1.0

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Table 2 Scope and Definition of Business and Management Consultancy Services Subsector Based on the PSIC Code

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Table 3 50 Largest Management Consulting Firms 6 Table 4 Performance of the World’s Largest Consultancies 7 Table 5 Profile of Major Players in the Global Management

Consulting Services Industry Based on Interviews made by Wetfeet.com

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Table 6 Profile of Various Management Consulting Services Offered

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Table 7 Contribution of the Business and Management Consulting Services to Business Services Industry, 1994 (values in thousands of pesos)

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Table 8 Large Multi-functional Consulting Firms or Full-Service Service Firms in the Philippines

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Table 9 Firms Which Started From Accounting and Audit Firms and Now Offers Major Consulting Services

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Table 10 General Management Consulting Firms 25 Table 11 Human Resource Management Consulting Services 25 Table 12 Financial Management Consulting Firms 26 Table 13 Marketing Management Consulting Firms 27 Table 14 Production Management Consulting Firm 27 Table 15 Risk Management Consulting Firms 27 Table 16 Management Consulting Firms Involved in Development

and Policy Studies/Work 28

Table 17 Franchise Management Consulting Firm 28 Table 18 Management Consulting Firm Involved in Business

Recovery and Turnaround 29

Table 19 Management Consulting Firms Which Are Limited to Offering Services for Specific Sectors/ Industry/ Market

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Table 20 Technology Consulting Firms 31 Table 21 Engineering Consulting Firms 32 Table 22 Business Intelligence Units 32 Table 23 Market Research Firms 33 Table 24 Investment and Financing Companies 34 Table 25 Learning and Academic Institutions and Non-Government

Organizations 35

Table 26 Internet-based Service Providers 36 Table 27 Number of Establishments in the Philippines Classified

Under Business and Management Consulting Services by Size of Employment

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Table 28 Nature of Employment in Establishments in the Philippines Classified Under Business and Management Consulting Services by Size, 1994

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Table 29 Compensation in Establishments in the Philippines Classified Under Business and Management Consulting Services by Size, 1994 (values in thousands of pesos)

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Table 30 Financial Indicators for Establishments Classified Under Business and Management Consulting Services, 1994 (values in thousands of pesos)

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Table 31 Costs Incurred by Establishments Classified Under Business and Management Consulting Services, 1994 (values in thousands of pesos)

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Table 32 Financial Performance of Leading Business and Management Consulting Services Firms in the Philippines Based on SEC Listing of Top 12000 Corporations (values in thousands of pesos), 1996-1999

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Table 33 International Funding Institutions Providing Loans and Grants to the Philippines, 1997-2000

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Table 34 Areas of Funding of 128 Local and International Funding Institutions

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Table 35 Market Linkage of Business and Management Consulting and Market Research Services in the Philippines

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Table 36 Supply Linkage of Business and Management Consulting and Market Research Services in the Philippines

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Table 37 Services Offered by Philippine Management Consulting Firms

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Table 38 Areas of Specialization of Philippine Management Consulting Firms

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Table 39 Profile of Manpower Competence and Expertise of Employees in Philippine Management Consulting Firms

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Table 40 Profile of Manpower Expertise and Human Resource Development Efforts in Global Management Consulting Firms

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Table 41 Possible Groupings of Stakeholders According to Area of Specialization

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List of Appendices Page Appendix A Nature and Scope of Research and Development

Linkages of the Different Schools

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Appendix B Nature and Scope of Consultancy Linkages of the Different Schools

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Appendix C Nature of Development Assistance Projects, 1998-2000

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Appendix D Government Information Systems Plan

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Appendix E Market Studies on Specific Countries in Asia-Pacific

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Appendix F Market Studies on Specific Countries in Europe 171 Appendix G Market Study on the United States 178 Appendix H Market Studies on Specific Countries in Other

Regions

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Appendix I List of International Associations of Management Consultants

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Appendix J Strengths and Weaknesses 189 Appendix K General Agreement on Trade in Services 191

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Executive Summary

The General Agreement on Trade in Services (GATS) had set the move towards further liberalization of international trade in services. It urges governments to identify and reduce barriers related to market access and national treatment. Among the services for which schedules of specific commitments had been set, management consulting services is included. Nevertheless, even before the GATS, the current trend towards internationalization and globalization of the world economy resulted to significant developments in the management consulting sector. The sector is in itself an open and liberal market. Entry, and work into foreign markets, are easy. This is because of minimal legal barriers to management consulting services. There are language and cultural barriers but they do not present serious obstacles to consulting across national boundaries.

According to the United Nations Central Product Classification, management consulting industry includes firms and individuals who offer advisory, guidance and operational services related to general management, financial management, marketing management, human resources management, production management and other management consulting services. It excludes computer activities, legal advice, accounting, auditing and bookkeeping, market research, and technical advisory e.g. engineering and architecture. In the Philippines, the PSIC or Philippine Standard Industrial Classification of the National Statistics office is used as a basis for the classification of industries and the subsectors. It includes not only activities as mentioned in the UN CPC but also includes the activities of management holding companies. The difference in the definition pose problems in estimating the real output and performance of the management consulting industry in the Philippines.

The management consulting services industry, by its very nature is global. The larger consulting firms operate internationally and have offices in various countries. In 1992, it was estimated that the consulting business sold over US $ 28.3 billion of advice, which further grew to US $ 43 billion in 1995. At present, the Kennedy Research Group estimated that the total consulting revenues worldwide is US $ 62 billion and growing between 10 to 30% annually from country to country. Based on services offered, it was estimated that technology planning represents 35 percent of the output, strategic services have a share of 20 percent and enterprise consulting covers around 15 percent . Forty two out of the 50 largest firms are homebased in the US, eight are based in Europe (two are based in France, three are in London, one is in Netherlands and two are in Germany). But even with the dominance of the largest consulting firms that eat a significant share in the market, consulting remains a fragmented business where thousands of small specialty firms prosper. Based on the total revenues of US $ 62 billion, the top ten firms have more than 50% of the share. And the recent growth rate is often more than the industry average of 10% to 30% annually. There is very high competition in the industry as reflected by a market

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where according to Milan Kubr, “supply has matched and even outgrown demand”. This is indicated by the (1) increasing number of players that enter a market characterized by minimum legal barriers for entry; (2) growing sophistication of clients who become more selective resulting to the development of a number of new and specialized services to address the complexity of new management problems; (3) increase in efforts towards advertising and marketing of consulting services; and (4) continued internationalization of consulting firms. Competition is usually based on the following: (1) skills and expertise of consultant/s; (2) development of new executive management tools and/or services; (3) reputation/track record as an expert in providing the service; and (4) network/s of clients established by consulting firms/individuals; and (5) price. By location, the largest market was estimated to be in the US where a US $ 15.2 billion was spent for management consulting services industry in 1992, followed by Europe with US$ 7.6 billion, and Asia with US $ 3.2 billion. The rest of the world spent an estimated US $ 2.3 billion. The social, technological, economic and cultural environment of business and government is changing rapidly. This corresponds to the changes in the customers and demand for management consulting services. The changes are characterized by: (1) increasingly sophisticated clients who, on their own, can handle present management problems formerly handled by consultants; (2) increase in need for consultants who can handle difficult, risky and new tasks that would require a great amount of information, speed of analysis and action ; (3) an approach to problems with an interdisciplinary, intersectoral perspective, innovative, with understanding of social and environmental implications; and (4) availability of special expertise. Services offered by internet-based consultancies became substitute products for reengineering solutions and efforts of traditional management consulting firms. While some technology firms tie up with management consulting firms to either broaden services or converge with services provided by management consultancies. There is also a rise in the growth of purely e-business consulting firms. And this poses a threat to the management consulting firms.

In the Philippines, the business and management consulting services industry contributed not more than 0.62% to the Philippine economy and 21.24% to the business services industry in 1994. Based on the top corporations in the industry, performance varies widely across the different consulting industries based on the size of the firm and services offered or specialization. Growth rate ranges from -5.27 to 738.52% based on financial performance reports of firms whose main activity is management consulting. Similar to global firms, management consulting firms are diverse in nature and fragmented. It can be classified into two broad classifications, traditional providers of management consulting firms who may offer specialized or full-service packages and non-traditional providers of management consulting services such as software vendors, IT consulting firms, market research firms, engineering consulting firms, non-profit research institutes or centers and academic institutions.

There is an absence of reliable data base to properly monitor the performance of the industry, the real contribution to the economy and the number of players in the industry. The small size of the industry as compared to other business service sectors lend itself to be included in “other business services” in the definition of PSIC. The definition of the PSIC is a point of contention since it includes activities of management holding companies therefore making estimates on the performance of the industry unreliable. To add to this is the very

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nature of the industry of being diverse. There is a very thin line that draws the difference between traditional and non-traditional providers of management consulting services. There is therefore a need to also include the specific management consulting services’ contribution in the business of the non-traditional providers since these may have a significant effect on the estimation of size of the market for management consulting services. Another point to be considered is the existence of small players and individual consultants in the industry. There is more difficulty in monitoring these individual consultants and small players who may come and go because of low entry and exit barriers in the industry.

There is a very competitive environment in the management consulting

industry in the Philippines. The competition in the industry is characterized by the following (1) existence of large international multifunctional firms with the capability of offering full-service packages and who have a significant share in the market; (2) increasing number of non-traditional providers of management consulting services; (3) low entry and exit barriers in the industry leading to more players in the industry and poor image of consultants since anyone can just be a consultant; (4) high supply of consultants and consulting firms and low demand for the services in both private and public sector markets. There are recent news indicating a decrease in official development assistance from other countries. For private sector market, it is concentrated on large firms and even large firms have limited demand for consulting services especially if they have internal consultants (corporate planning department); (5) existence of few players with highly differentiated services. Unlike technology consulting or market research firms who were able to offer differentiated services through branded solutions or packages, few consulting firms were able to successfully do so. Switching costs are therefore very low.

Large, new players and non-traditional providers of management

consulting services have added significant competitive pressures to the local market . With the blurring of the consulting industry’s boundaries, non-traditional suppliers are adding to the supply of consulting services available to the market. In addition, there is a growth in advisory services offered by public and non-profit organizations such as colleges, universities and non-government organizations. The competition these entities offer can affect management consulting firms of all sizes.

There is a growing threat posed by technology consulting firms among

management consulting firms. The emergence and growth of technology consulting firms point out to a growing demand of clients for information-technology related services.

Information technology plays a big role in the businesses of many companies. Slowly, even in government, technology is playing an important role in systems and processes. Technology consulting firms

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pose a big threat to management consulting firms especially to those targeting private sector client companies. Private companies and government corporations, in the past years have invested heavily on computerization and business process reengineering. The strategy of many consulting firms now is to recruit business graduates to complement their technical expertise. These firms have realized the need to understand business strategy and processes. This led to solutions known as Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), e-commerce and e-business solutions. Since many technology consulting firms are also software vendors which are used in the implementation of the business processes developed, then it is expected that switching costs will be high. Therefore, these technology consulting firms are expected to be there for a longer time to monitor implementation of systems that they placed. This has eaten a significant share in the market of management consulting firms offering services related to business process engineering, systems evaluation and systems audit. It is not impossible that these technology consulting firms can grow and become a full-service consulting firm offering strategic management services and business intelligence. This is not far-fetched since the services they offer now are related to tools to implement strategies and tools to obtain continuous business information to make sound decisions.

The Philippine management consulting community is being challenged to

develop new services as a result of rising client expectations and sophistication, changes in the information technology and growing competition. Philippines’ strength in management consulting is the small and sectoral expertise of some players in the industry and it is a particular challenge for these knowledge-based companies to focus significant human resources on new service development.

At present, the industry has numerous small to medium-sized general

management consulting firms and consultants but lack of locally-established firms with highly specialized expertise. Global trends as well as available local data shows that differentiation is a factor in the success of many small to medium-sized consulting firms.

The increasingly competitive marketplace dictates that in order to

meet the challenges of the knowledge-based economy, firms are required to innovate constantly in order to react quickly to changes. Shortages of time, people and capital are major drivers why firms explore the use of external sources of expertise known as outsourcing. Outsourcing as a practice in the industry ranges from routine, project-based, short-term contracts to cooperative agreements, including partnerships and strategic alliances. This is why many established consulting firms invest to maintain a database of available consultants and

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experts as well as consulting firm partners to rely on for particularly large projects.

There is a rapid growth in the number of consultants offering management advice, without a widely accepted level of standards, standards of conduct, then the industry is bound to be negatively affected both locally and globally. Since there are no stiff entrance requirements for practicing inthe industry

that are equivalent to other professions. Some of these “ consultants” do not have training in management consultancy processes and do not subscribe to professional code of ethics in consulting.

Accreditation of consultants has long been pushed by some players

in the industry and particularly by IMPHIL but there is absence of a legal framework and specific government support to assist in the implementation of accreditation of consultants. This can upgrade the standards in the industry and counter existence of more “fly-by night” consulting firms and consultants.

The accreditation of consultants would help a lot in improving demand

and factor conditions in the industry. A reduction in the number of short-term, one to two projects, fly-by night consultants and consulting firms can be made if this is implemented. The poor image of consultants will be addressed. The accreditation would also pave the way to easily market and promote the services of consulting firms and consultants among local and international clients.

There is a limited domestic market for management consulting in the

Philippines. Private clients are limited to large players in the industry which are mostly multinational which either have their own internal consultants or would prefer international management consulting firms recommended by their mother companies. Very few small and medium-sized firms seek the assistance of consultants since this is considered an”expense”. The Philippine domestic market is not as sophisticated as the clients found in Europe or United States where small and medium-sized ventures are very much open and encouraged to seek the expertise and assistance of management consulting firms to ensure productivity and profitability.

Projects obtained through international funding institutions and

government agencies are limited to the available official development assistance and national budget. There are trends that show a decrease in the official development assistance as well as increasing number of international players to compete with in the projects.

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The industry is also characterized by lack of industry-wide information on market opportunities abroad. Most efforts with regards to market research related to consulting opportunities abroad are done on a per-company or individual basis. There is no institutional information network to assist management consulting firms in expanding their market. With the expertise and knowledge resident in the small and medium-sized firms, there is significant potential to take advantage of the growing global market. The smaller firms usually cannot compete with foreign firms for large projects, but with the specialized functional and sectoral knowledge, they can take on niche assignments with larger firms.

Absence of a focused marketing strategy aimed at promoting and developing

the industry towards preparation for the international market. Along with a growing need to strengthen the management consulting capabilities of the players in the industry, there is also a similar need to market the companies who are capable and willing to compete abroad. In the face of a limited domestic market, there is a need to expand further into other markets outside the country.

In seeking to promote the growth and national development of the

Philippines Consulting Industry in general and the Filipino consultants in particular, the proposed action plan will approach the objective at three levels: The government, COFILCO itself (being an umbrella organization that represents Filipino professional consultants) and the other related organizations levels, which includes IMPHIL. Parallel to these approaches will be a legislative approvals of reviving the passage of the proposed National Consultancy Act: Government Level: 1. To seek a government policy statement that the government

supports the engagement of Filipino Consultants and an assurance of a level playing field:

a. in loan negotiations b. in project scoping and position c. in national project (should hire consultants instead of hiring

employees, as in-house staff of the agency, limit agency capability to contract management

2. Engagement of the Filipinos as prime or lead consultants. For foreign assisted project, must be at least joint ventures (50-50 min) with the Filipino consultants for two(2) years, then Filipino consultants as lead consultant for the next five (5) years, and then 100% totally Filipino consultants onwards. For locally funded project, only Filipino consultants as lead or Prime consultants.

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3. Increasing the fees of local consultants. Standard rates (minimum) for local consultants, for locally-funded projects. Standard rates for Filipino consultants at international rates for international selection of consultants.

4. It is strongly recommended that the Implementing Rules and Regulations

of E.O.164 the procurement of Consulting Services for Government Projects, or the Consultancy IRR which provided a systematic and standard set of procedures in the hiring of local and foreign consultants be strictly and fully implemented. The consultancy IRR was conceived to develop a more orderly, uniform and transparent set of procedures in the selection of consultants and likewise increase the participation of local consultants as well as to provide adequate and fair systems, rules and conditions governing government’s procurement of consulting services many projects. No less than the former president Fidel V. Ramos in 1992 articulated the fact that successful consultancy implies rich project experience and high technical capabilities, as demonstrated by Filipino consultants in a wide and diverse range of fields. “They not only provide needed expertise to plan, build and manage project in the country, but also in foreign exchange from project involvements abroad,” but first track record must be developed. And this was not the general case among local consultants. Their flight was sad and a lonely one. Their experience in obtaining government project since the consultancy IRR was characterized by frustration and disappointment. They have become a second rate citizen in their own country and moved in the shadow of their foreign counterparts as regards to governments projects. The Philippine Management Consulting Industry is a potential giant if given an opportunity to grow and develop its wings to become a force to contend with global management consulting. The industry is now expressive of its remaining hope on the full implementation of the Consultancy IRR to fulfill its four basic principles. These are: first, to achieve maximum efficiency and economy in the development and implementation of development projects and related activities; second, to enhance the growth of the local consulting industry and to optimize the use of local expertise, material and resources; third, to bring about the transfer of new technology into the country; and fourth, to maintain transparency of government procurement processes and procedures. The local consultants are one in the export potential of their craft but a faithful compliance of the consultancy IRR is a necessity whose time has come.

5. Monitor through NEDA, EDC and congress committee on trade and industry the full implementation of the consultancy IRR. In the spirit of the

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transparency, there is a need to publish in the Web, the list of the government projects for bidding in line with the E-Commerce act.

6. Revive and lobby for the passage of the National Consultancy Services Act which was based on E.O.164. There is no law governing the consulting industry which calls for an organized regulatory body of government that will supervise, control and enhance the industry, and in the selection and hiring of consultants for government infrastructure and other projects giving priority to Filipinos and/or Philippine Consulting firms thus make them globally competitive.

7. Impose penalty for consultants not complying with the NEDA guidelines. 8. To assist the Filipino consultants to penetrate and maximize participation

in the international market.

• Policy to support the local consultants in foreign assisted local projects to develop capability and gain experience.

• Policy to promote local consultants through trade shows, advertisements by the Philippine government

• Policy to support Filipino consultants to obtain software license at reasonable rates and terms.

• Provision for incentives such as tax breaks to those who penetrate the international market.

COFILCO Level and other related association level 1. Continuous dialogue with cabinet secretaries involved in policies related to

infrastructure and hiring consultants. DTI, NEDA, DPWH, DOTC, DILG, NPC, NHA, PPA and NIA.

2. Capability-building of IMPHIL. IMPHIL, with the support of the government and other non-member players in the industry should be able to build its capacity through an aggressive campaign in increasing membership and developing programs to be able to achieve the objectives for which it was founded. IMPHIL was primarily found to represent the management consulting industry as well as assist in enhancing the competitiveness of the industry. It has a big role to play in competitiveness-enhancement of the industry. Its members are among the well-established and long-existent consulting firms in the country, but with the increasing diversity in size and specialization of management consulting firms, it would have been ideal to have significant representations of the other management consulting firms. IMPHIL should make aggressive efforts to open its doors to more number of members who can commit to its existing code of professional ethics. This can be done through regular press releases, regular updating of its website, organizing professional development programs

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for management consultants, maintaining a secretariat, developing strong linkages with local professional and industry associations and international associations.

Strengthening the domestic market. The industry is characterized by a

competitive environment where the supply exceeds the demand and there are low barriers to entry. To have a well-developed domestic market there are three important stakeholders who will play a role in the strengthening of the domestic market: the customers, the providers of services and the suppliers.

The customer base need to be expanded. At present, there are

opportunities that can be developed in the domestic market among small and medium sized firms which are not used to hiring consultants, large firms which have preferential treatment for foreign consultants and government and non-government organizations which have research and consultancy needs in their projects but may not have access to available consulting firms they can tap. Among small and medium sized firms, IMPHIL can spearhead an aggressive awareness campaign to introduce the organization and its member firms along with service capability to some associations of small and medium sized firms like the Philippine Exporters’ Association (PHILEXPORT), for example. The same campaign may be done to Chambers of Commerce (Philippine, American, Chinese, Australia-New Zealand, European) and Non-Government Organizations’ associations. Campaigns can be done through provision of brochures which were already prepared by IMPHIL to these associations. Government can also assist through DTI or DFA in representing the industry to these associations or assisting in establishing linkages between the associations. IMPHIL can also forge linkages with industry associations like PCCI and the like. Presentation and promotion of services among their member firms can be made to make more companies aware of availability of local consultants who can offer the same quality of services as their foreign counterparts as well as strengthen the position of the Philippine management consulting firms locally and lessen the threat of new entrants. Government, as an institution with significant share in the market of consulting firms should give opportunities to consulting companies, specifically those that can be accredited to provide quality services according to their expertise, to be able to assist in building their track record in the industry.

The providers of management consulting services, especially the small

and medium-sized players need to strengthen outsourcing capabilities to be able to meet the diverse needs of clients and compete with large multi-functional consulting firms. But at the same time, greater differentiation in core competencies should be developed.

Joint ventures between foreign and local consulting firms should be

encouraged to foster technology transfer and training. There is a need for

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consulting firms to strengthen technology through management tools. But these ventures should be viewed as a long-term partnership for both parties. The contractual agreement should clearly define responsibilites of each firm.

Important suppliers of human resources, information and technology

should likewise be developed. Academic institutions and professional schools should be encouraged to offer electives in management consulting services and practices(management services , for accountants) as well as opportunities to conduct practicum training in consulting firms to develop awareness among future business leaders about the role that management consulting play in the economy. This will create opportunities for acceptance of management consulting in the future among these business leaders as an important tool to assist management and not just another “expense or cost” that a company would incur. In the Philippines, unlike in more developed countries like US and Europe where consulting is a standard, expected business practice, Filipino consulting firms, especially the small and medium-sized firms are not used to getting consultants. Cooperation from information suppliers like the government agencies such as NSO, NSCB, SEC, and DTI is needed. This is further explained in the next section of this study concerning performance monitoring scheme. Technology suppliers such as software vendors in the Philippines can assist the industry in developing partnerships with consulting firms to develop branded solutions especially for specialized services offered by management consulting firms. This can be similar to branded solutions developed by market research firms. This is specifically applicable for management consulting firms with differentiated core competencies. IMPHIL can assist in identifying these firms with differentiated core competencies.

Expansion into the foreign market. With a limited domestic market,

The industry would have to find ways to enhance competitiveness and expand market into foreign shores. This can be implemented through (1) identification of players with extensive track record in foreign countries and those who are committed towards expanding their market overseas; (2) assist in developing capabilities for international market penetration of these players; (3) monitor performance in foreign markets and continuously provide information on market opportunities abroad.

In identifying the players in the industry with extensive foreign experience, based on the profile of players in the industry, particularly IMPHIL members, it can be gauged that many of the consulting firms who were able to be successfully engaged in international projects or projects overseas are those in the areas of development studies and environmental management, engineering and technology consulting through projects with international funding institutions, or partnerships/affiliation with foreign consulting companies. These are the major areas seen where consulting firms can possibly compete in foreign markets.

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To assist in building capacities for international market penetration, these players identified can be tapped to represent IMPHIL in international symposia, conferences, sponsored by international consulting associations to be able to network with possible partners, affiliates and clients. Alliances of the established players with extensive foreign experience with other players who have developed their capabilities well but have not had as extensive opportunities as their counterparts can be a means to foster sharing of information, capability building as well as development of specialists. These are cooperative strategies that may be attractive to organizations with limited financial, technological and human resources to contend with. Alliances and consortia among local consulting firms of various specializations should be encouraged. These firms can complement each others capability and expertise to compete with the international market needs’ for projects. They are not formed to undertake a specific project , but exist as a pool of resources available on demand. The lead firm explores markets in developed or developing countries and identifies the consulting firm (or group of firms) in the consortium best suited to provide the required services

Also, through its international affiliations, IMPHIL can facilitate global

collaboration among management consultants. Establishing and strengthening a secretariat for IMPHIL would go along way to implement these collaborative actions. This will build the electronic infrastructure to facilitate formal and informal connections between Philippine members and members of institutes in other countries. The level of association between Philippine consultants and consultants in other countries will measure the progress made on the issue.

Trade commissioners in foreign posts can benefit from informed,

immediate support in promoting the industry. The IMPHIL and government-initiated agencies can examine the feasibility of a “secondment” program that would place experienced management consultants in selected number of foreign posts for a specified period, say, for two-year terms. The countries selected would be in which the Philippines has significant business opportunities. The secondees would be involved in formulating and chanelling specific opportunities to Philippine management consultants. The secondees could also build relationships with local consulting firms and contractors of large projects. Such relationships can provide valuable intelligence about required service offerings in the global market.

Also with the ongoing, computerization efforts in the government, if these

are successfully implemented through the GISP, management consulting industry can benefit with its access to better information and access to better communication

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Institutionalize the development of the management consulting services sector. Governments and private sector should recognize that developing the local consulting profession is a long-term process of institutional development. based on the development of human resource, information and technology. These can be done by designating a team as the focal point with responsibility in preparing and monitoring the strategy and plan of action for developing the profession. This can be a combination of representatives from the associations and DTI, universities, professional societies, and national associations of consultants should play a more active and effective role in raising the professional standards and quality of performance of the consulting profession. Formal linkages between professional schools and the consulting industry should be established. This practice is prevalent in other countries especially in the US which paved the way for development of new management tools and specialists, as well as participation of Philippine consulates as institutional marketing arm of the industry in different countries. Consulates abroad should engage in aggressive marketing efforts to market services abroad and conduct follow-through on targeted partners and clients. Targeted clients are those who may want to conduct business in the Philippines and would need consulting assistance or foreign companies who would want to get the services of Filipino consultants/consulting firms

To properly monitor the performance of the industry , the following are the key result areas that need to be addressed:

National Information database. Based on the data presented on the profile of establishments and practicing consultants in the Philippines, it can be gauged that one of the weaknesses of the industry is the weak database it has. There is lack of information to monitor the performance and contribution of the management consulting service subsector to the economy.

In this aspect, there should be a close coordination between the information

centers of the National Statistics Office, Securities and Exchange Commission, Department of Trade and Industry and IMPHIL, as a representative from the industry sector to identify the needs of the industry in the performance of growth and opportunities. Specifically, the following improvements can be made:

• through the government, the PSIC should be harmonized with the UN

CPC classification/definition to have a common framework by which management consulting industry is monitored. Specifically, exclude the activities of management holding companies in the PSIC definition

• through IMPHIL, regular surveys through e-mail can be conducted among its members and possibly, other non-members to establish a database that is necessary and useful in establishing specific strategies that IMPHIL can take in addressing new issues and challenges in the market. This should be done on a regular basis to confront the changing market conditions and ensure competitiveness of its members and the industry, in general. In other organizations like

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FIDIC, for example, this is regularly done to determine emerging trends in the market. The following are some of the suggested surveys that can be conducted at different points in time:

o Survey on the amount/percentage share of sales generated by each company

- classified by industry/sectors served - classified by services rendered - classified by source (domestic sales or export sales) This will assist in identifying trends in the market and market performance. It will also support any marketing activities

that can be initiated by IMPHIL to improve performance in the domestic and foreign market.

o Survey on training needs. This will assist IMPHIL in the design and implementation of a professional development program that can assist capability building in the industry.

o Survey on professional designations and expertise of consultants in the Philippines. This will assist IMPHIL in determining outsourcing strategies especially for larger projects where cooperative collaborations are formed to better compete in the market.

o Survey on the extent by which information technology is used in the companies. This will again assist IMPHIL in determining information-technology related seminars that can be conducted through the professional development program of IMPHIL.

Accreditation of Consultants. An accreditation system of management

consultants may be implemented with the assistance of the Department of Trade and Industry, NEDA and IMPHIL to establish consultancy as a profession and safeguard the quality of consultancy services in the Philippines.

An accreditation system of management consultants may be implemented

by DTI and IMPHIL to establish consultancy as a profession and to safeguard the quality of consulting services delivered. It is necessary, that an appropriate legislation , especially of similar measures like the National Consultancy Act may be lobbied by IMPHIL and COFILCO for DTI to implement such accreditation. Accreditation by specialization may provide proper categorization of consultants. The Certified Management Consultant (CMC) designation on practitioners who successfully complete its course of study and practical experience requirements and adhere to uniform code of professional conduct can be given according to area of expertise or specialization.

A tax incentive scheme for companies including small and medium sized

firms who will avail of consulting services from accredited consultants may likewise be implemented through proper legislation in order generate more patronage for local consulting firms. This will create additional domestic demand for the consulting profession.

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An In-depth study on the Management Consulting Services

Industry in the Philippines

“Four issues will shape the consulting industry. Firms that can come to grips with them are likely to be among the largest and

most successful: (1) technology; (2) global reach; (3) human capital; and

(4) relationship management.” - Ed Pringle Introduction The General Agreement on Trade in Services (GATS) had set the move towards further liberalization of international trade in services. It urges governments to identify and reduce barriers related to market access and national treatment. Among the services for which schedules of specific commitments had been set, management consulting services is included. Nevertheless, even before the GATS, the current trend towards internationalization and globalization of the world economy resulted to significant developments in the management consulting sector. The sector is in itself an open and liberal market. Entry, and work into foreign markets, are easy. This is because of minimal legal barriers to management consulting services. There are language and cultural barriers but they do not present serious obstacles to consulting across national boundaries. In the line of this events, the Philippine management consulting industry is a promising sector that has been identified as one of the priority subsectors where the Philippines can possibly enhance its competitiveness. For this purpose, this paper aims to achieve the following objectives:

1. determine the scope of the management consulting services industry 2. present the industry structure in both the international and local setting 3. identify the laws affecting the trade of management consulting services 4. identify the conditions in entering foreign markets 5. provide information on existing local and international associations and

their efforts towards enhancing competitiveness of management consulting industries

6. provide information on the market potential and demand in the Asia Pacific, Europe, North America and other regions worldwide

7. identify training needs that could enhance competitiveness of the management consulting services industry

8. identify opportunities and threats faced by the management consulting services industry

9. determine the degree of competitiveness of the Philippine management consulting services industry

10. propose strategies and plans to enhance the competitiveness of the Philippine management consulting services industry.

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11. identify areas necessary in the implementation of a performance monitoring scheme for the industry

1. The Industry 1.1 Scope and Definition

An analysis of the industry would require an understanding of its coverage and definition. Management consulting service industry is a subsector of the larger industry of business services. According to Greiner and Metzger, management consulting industry consists of individuals and organizations that offer ”professional advisory services contracted for and provided to organizations by specially trained and qualified persons who assist, in an objective and independent manner, the client organization to identify management problems, analyze such problems, recommend solutions to these problems, and help, when requested in the implementation of solutions”.

Management consulting services is traditionally structured in

accordance with the structure of management functions– production/operations, human resource, marketing and finance. The World Trade Organization (WTO) Classification, which is the basis of most international trade agreements, is similarly based on the said structure. The Philippine classification and definition is also presented in this section to aid in the analysis of the Philippine management consulting services industry.

1.1.1 United Nations Central Product Classification (UN CPC)

WTO uses the United Nations Central Product Classification (UN CPC) as a guide in the classification of industries. UN CPC has more than one existing version that can be used in the classification, two of these are the Provisional Code and Version 1.0. The Provisional Code, which was developed in 1989, was the code used during the General Agreement on Trade in Services (GATS). The CPC Version 1.0, on the other hand was the more recent version developed in 1997.

According to the UN Provisional Code, management

consulting services industry is among the subsectors classified under business services. Business services industry includes legal, accounting, auditing and bookkeeping services; taxation services; market research and public opinion polling services; management and consulting services; architectural, engineering and other technical services. The UN CPC Version 1.0, on the other hand have more subclassifications as compared to the Provisional Code. Management consulting services industry falls under the subsector

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of consulting and management services, which falls under other professional, scientific and technical services subsector , which is in turn under the business and production services industry. Consulting and management services include management consulting services, business consulting services, scientific and technical consulting services n.e.c., computer consultancy services, computer facilities management services, systems maintenance services, and other management services, except construction project management services

Management consulting industry includes firms and individuals who offer advisory, guidance and operational services related to general management, financial management, marketing management, human resources management, production management and other management consulting services. This scope and coverage of the management consulting industry presented differences between the Provisional Code version and Version 1.0. The Provisional Code includes public relations consulting services under management consulting industry while the CPC Version 1.0 separated public relations services into a different subsector called the business consulting services. Table 1 presents a detailed outline of the scope and definition of each of the services offered by firms in the management consulting services subsector.

Table 1. Scope and definition of the management consulting services subsector based on UN CPC Provisional Code and Version 1.0

Management consulting services

Coverage

General management consulting services

Advisory, guidance and operational assistance services concerning business policy and strategy and the overall planning, structuring and control of an organization. More specifically, general management consulting assignments may deal with one or a combination of the following: policy formulation, determination of the organizational structure (decision-making system) that will most effectively meet the objectives of the organization, legal organization, strategic business plans, defining a management information system, development of management reports and controls, business turnaround plans, management audits, development of profit improvement programmes and other matters which are of particular interest to the higher management of an organization.

Financial management consulting services

Advisory, guidance and operational assistance services concerning decision areas which are financial in nature, such as working capital and liquidity management, determination of an appropriate capital structure, analysis of capital investment proposals, development of accounting systems and budgetary controls, business valuations prior to mergers and/or acquisitions, etc. Exclusions: security broking and fund management services, advisory services on short-term portfolio management which are normally offered by financial intermediaries.

Marketing management consulting services

Advisory, guidance and operational assistance services concerning the marketing strategy and marketing operation of an organization. Marketing consulting assignments may deal with one or a combination of the following: analysis and formulation of a marketing strategy, formulation of customer service and pricing policies, sales management and staff training, organization of distribution channels (sell to wholesalers or directly to retailers, direct mail, franchise, etc.), organization of the distribution process, package design and other matters related to the

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Management consulting services

Coverage

marketing strategy and operations of an organization. Exclusions: public relations services, advertising services.

Human resource management consulting services

Advisory, guidance and operational assistance services concerning the human resources management of an organization. Human resources consulting assignments may deal with one or a combination of the following: audit of the personnel function, development of a human resource policy, human resource planning, recruitment procedures, motivation and remuneration strategies, human resource development, labour-management relations, absenteeism control, performance appraisal and other matters related to the personnel management function of an organization.

Production management consulting services

Advisory, guidance and operational assistance services concerning methods for improving productivity, reducing production costs and improving the quality of production. Production consulting assignments may deal with one or a combination of the following: effective utilization of materials in the production process, inventory management and control, quality control standards, time and motion studies, job and work methods, performance standards, safety standards, office management, planning and design and other matters related to production management. It also includes services provided by agronomists and agricultural economists. Exclusions: advisory services and design for plant layout and industrial processes which are normally offered by consulting engineering establishments.

Public relations services*

Advisory, guidance and operational assistance services concerning methods to improve the image and relations of an organization or individual with the general public, government, voters, shareholders and others.

Other management consulting services

Advisory, guidance and operational assistance services concerning other matters. These services include industrial development consulting services, tourism development consulting services, etc. It also includes logistic consulting services

• Public relations services is classified under a separate subsector of business consulting in CPC Version 1.0 but is included under the management consulting subsector in the Provisional Code

Source: United Nations Classifications Registry of CPC Version 1.0 and Provisional CPC. http://esa.un.org/unsd/cr/registry/regcst.asp.

1.1.2 Philippine Standard Industrial Classification (PSIC)

In the Philippines, the PSIC or Philippine Standard Industrial Classification of the National Statistics office is used as a basis for the classification of industries and the subsectors. Similar to the United Nations Classification, there are different versions of the PSIC Code, namely the 1977 PSIC and 1994 PSIC. But unlike the United Nations classification where business consulting and management consulting services are separate subsectors, in the PSIC, the subsector is combined in one subsector named as “business and management consultancy services or activities”. The definition of this subsector, for the 1977 and 1994 PSIC codes, coincide and is explained in Table 2.

Table 2. Scope and definition of business and management consultancy services subsector based on the PSIC Code.

Coverage 1977 PSIC Code 7414

Inclusion • Provision of advice, guidance or operational assistance to business • Activities involving public relations e.g. through image building and opinion molding,

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Coverage 1994 PSIC Code 85905

to improve the relations of client with the public, the media or others, other than by paid advertisements, welfare and charity affairs, politics, lobbying

• Activities in connection with planning, organization, efficiency and control, management information etc.

• Combined management consultancy and actual management e.g. by agronomists and agricultural economists to farms etc.

• Arbitration and conciliation between management and labor • Activities of management holding companies Exclusion • Computer activities, legal advice, accounting, auditing and bookeeping, market

research, technical advisory e.g. Engineering and Architecture

Source: 1994 Philippine Standard Industrial Classification, National Statistics Office

The WTO definition and the PSIC definition coincide except for one area: the PSIC includes activities of management holding companies. This important detail will therefore be taken into consideration in the analysis of available government data related to the industry.

In this study, the scope and definition of the WTO will be

used to provide the framework for discussion but taking into consideration the unique nature of the industry of being very fragmented and diverse. The industry consists of a group of companies that serve the needs and wants of their clients as specified in the coverage in Table 1 but who may also at the same time belong to related industries excluded in the definition such as accounting, audit and financial service firms, engineering and architecture consulting firms, technology consulting firms, employment agencies, and market research firms.

1.2 Industry structure

The reconstruction after the war, rapid growth of business and

economy, technological changes, emergence of new developing economies, and expansion of finance, commerce and industry across different countries are some of the factors that created favorable opportunities and demands for the introduction, development and growth of the management consulting services industry.

The development of management consulting services in different

countries are similar yet different in various aspects. This section presents the industry structure of the management consulting services industry in two ways- one is based on the global point of view and the other is based on the situation in the Philippines.

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1.2.1 Global management consulting services industry

The management consulting services industry, by its very

nature is global. The larger consulting firms operate internationally and have offices in various countries.

In 1992, it was estimated that the consulting business sold

over US $ 28.3 billion of advice, which further grew to US $ 43 billion in 1995. At present, the Kennedy Research Group estimated that the total consulting revenues worldwide is US $ 62 billion and growing between 10 to 30% annually from country to country.

Based on services offered, it was estimated that technology

planning represents 35 percent of the output, strategic services have a share of 20 percent and enterprise consulting covers around 15 percent .

Location of leading firms. Table 3 provides a listing of the

50 largest management consulting firms according to Consultant News. Forty two out of the 50 firms are homebased in the US, eight are based in Europe (two are based in France, three are in London, one is in Netherlands and two are in Germany). But even with the dominance of the largest consulting firms that eat a significant share in the market, consulting remains a fragmented business where thousands of small specialty firms prosper.

Table 3. 50 Largest Management Consulting Firms

Firm Main Office 1. Andersen Consulting Chicago, IL, USA 2. PricewaterhouseCoopers New Yor, NY, USA 3. Ernst & Young Cleveland, Ohio, USA 4. Deloitte Consulting New York, NY, USA 5. Computer Solutions Corporation El Segundo, CA, USA 6. KPMG New York, NY, USA 7. McKinsey & Company New York, NY, USA 8. Cap Gemini Paris, France, EUROPE 9. Mercer Consulting Group New York, NY, USA 10. Arthur Andersen Chicago, IL, USA 11. A.T. Kearney Chicago, IL, USA 12. Towers Perrin New York, NY, USA 13. Booz-Allen & Hamilton McLean, VA, USA 14. IBM Consulting Somers, NY, USA 15. American Management Systems Fairfax, VA, USA 16. Keane Boston, MA, USA 17. Hewitt Associates Lincolnshire, UL, USA 18. Sema Group Paris, France, EUROPE 19. Logica London, United Kingdom, EUROPE 20. The Boston Consulting Group Boston, MA, USA 21. Watson Wyatt Worldwide Bethseda, MD, USA 22. DMR Consulting Group Montreal, PQ Canada 23. CMG London, United Kingdom, EUROPE

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Firm Main Office 24. Aon Consulting Group Chicago, IL, USA 25. Cambridge Technology Partners Cambridge, MA, USA 26. Arthur D. Little Cambridge, MA, USA 27. Bain & Company Boston, MA, USA 28. Debis Systemhaus Fasanaweg, Germany, EUROPE 29. PA Consulting Group London, United Kingdom, EUROPE 30. Woodrow Milliman Seattle, WA, USA 31. Origin Eindhoven, Netherlands, EUROPE 32. Telecordia Technologies (formely Bellecore) Morristown, NJ, USA 33. Buck Consultants Secaucus, NJ, USA 34. Metzler Group Chicago, IL, USA 35. Roland Berger & Partner Munich, Germany, EUROPE 36. Technology Solutions Company Chicago, IL, USA 37. Whitman Hart Chicago, IL, USA 38. CTG Buffalo, NY, USA 39. CBSI Farmington Hills, MI, USA 40. Renaissance Worldwide Newton, MA, USA 41. Hay Group Philadelphia, PA, USA 42. Mitchell Madison Group New York, NY, USA 43. Perot Systems Dallas, TX, USA 44. INS Sunnyvale, CA, USA 45. McGladrey & Pullen Schaumburg, IL, USA 46. CIBER Englewood, CO, USA 47. Monitor Company Cambridge, MA, USA 48. First Consulting Group Long Beach, CA, USA 49. Horwath International New York, NY, USA 50. Hagler Bailly Arlington, VA, USA Source: Consultant News, http://www.kennedyinfo.com/mc/cn50.html

Financial performance of leading firms in the industry. Table 4 presents the revenue performance of the 1998 leading global consulting revenues for the top ten firms. It can be noted that based on the total revenues of US $ 62 billion, the top ten firms have more than 50% of the share. And the recent growth rate is often more than the industry average of 10 to 30% annually.

Table 4. Performance of the World’s largest consultancies

Rank

Firm

Most recent year’s

revenue ( $ million)

Previous year’s

revenue ( $ million)

Growth

rate (%)

Effective Date

Number of consultants

1 Andersen Consulting 8,307.0 6,647.0 24.9 Dec 98 53,416 2 PricewaterhouseCoopers 6,000.0 4,286.0 40.0 Jun 98 39,000 3 Ernst & Young 3,970.0 2,950.0 34.6 Sep 98 16,450 4 Computer Sciences Corp 3,500.0 3,000.0 16.7 Mar 99 20,000 5 Deloitte Consulting 3,240.0 2,310.0 40.3 Aug 98 Not available 6 KPMG 3,000.0 2,300.0 30.4 Sep 98 14,000 7 McKinsey & Company 2,500.0 2,200.0 13.6 Dec 98 Not available 8 Mercer Consulting Group 1,543.0 1,338.0 15.3 Dec 98 Not available 9 Arthur Andersen 1,367.6 952.9 43.5 Aug 98 Not available

10 At Kearney 1,234.0 1,061.0 16.3 Dec 98 2,583 Source: Management Consultant International, June 1999 International Accounting Bulletin

Classification of firms. Management consulting firms cater

to diverse problems of management and diverse types of

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businesses and industry. It is therefore expected that management consulting service firms are diversified in the services they offer, markets they serve, status, and organization. Consulting firms can either be classified based on “service expertise” such as corporate strategy, human resource development, financial valuation or materials requirements planning. However some would be classified based on “industry expertise” such as semiconductors, telecommunications, social services, among others. And furthermore some can be classified based on clients served such as the private sector, government sector or international funding institution. Firms can also be classified based on status in the market and organization.

Firms can also be categorized based on status in the

market: the industry elite, the big five, and boutique firms. The industry elite includes the rich and famous of the consulting world. These companies provide advice to executives which are considered as cutting-edge strategy and operations. The best graduates and MBAs are usually in these firms like Arthur D. Little, AT Kearney, Bain & Co., Booz-Allen & Hamilton, Boston Consulting group, McKinsey & Co., Mercer Management Consulting, and Monitor Co., to name a few. The firms known as the Big Five are usually those that belong to the biggest accounting firms that offer also consulting services. These are Andersen Consulting, Price Waterhouse Coopers, Ernst and Young, Deloitte Consulting, Coopers and Lybrand, and KPMG Peat Marwick. Recently, the SEC in US had ordered a separation of the auditing and consulting units of these firms to safeguard conflicts of interest. Ernst and Young sold their consulting firm to a French company named Cap Gemini while Arthur Andersen spun off Andersen Consulting. Table 5 presents a profile of the big five firms based on interviews by webfeet.com. The major players in the global management consulting sector offer a full array of services from strategy management to technology management. These services are rendered to both private and public sectors. Their competitive advantage lies mostly on their ability to develop services into one that meets the changing needs of their clients. They still offer the basic traditional consulting services related to strategy management, financial, operations, marketing and human resource management but packaged accordingly based on new trends in technology. And growth areas, as mentioned by these major players are in the areas of e-business, information technology, change management and in service industry sectors of communications, health and finance. Boutique firms are usually smaller firms that specialize along industry or functional lines. They

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have more focus as compared to the Big Five. (http://www.kennedyinfo.com).

Table 5. Profile of major players in the global management consulting services industry based on interviews made by Wetfeet.com

Consulting Firm

Services and Customers

Competitive Advantage Growth areas

Andersen Consulting

Services Technology management Strategy management Process management Change management Customers Top corporations (Fortune 500) from various industries

Continuously redefine management consulting since the 1950’s Continuous growth of around 20% per year

Technology and strategy e-Economy Business Process Management outsourcing service (which topped the US $1 billion mark in revenues) Growth in the Financial Services (33 % growth in 1998; US $ 2.5 billion) Growth in the Communica-tions Services (30 % growth in 1998; US $ 1.2 billion) Growth in the Chemical and Health Services (42 % growth in 1998)

Deloitte consulting

Services Enterprise transformation Strategy Management

Only firm who has been able to combine all aspects of enterprise transformation services and the unique HR models for each service , under one roof Known for having a very collegial work environment, both with clients and their people

Invesrment and growth in major transformationa reas – strategy, process, technology and change leadership

KPMG Consulting

Services Internet integration services Customer relationship management Supply chain management Knowledge management Financial management

Provision of industry-leading internet based solutions for clients in the Fortune 1000 companies, the middle amrket and the public sector Ability to provide rapid implementations using preconfigured , templated solutions Most experienced consulting workforce averaging 13.5 years of industry experience

Technology alliances such as those with Cisco to develop global tele-communica-tions services across industries and with Qwest for internet-based applications management, hosting and service providing

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Consulting Firm

Services and Customers

Competitive Advantage Growth areas

Human resources management Strategy management Branding Design/Media Infrastructure technology enabling Hosting/ Outsourcing Customers From those in the six industry lines of business: 1)Communiications and Content 2) Consumer and Industrial markets 3) Financial Services 4) Health Care 5) High Technology 6) Public Sector

Strategic alliances with Cisco, Microsoft and Qwest Revenue growth outpace the consulting industry average

Pricewater-house Coopers

Services Training Programs Human Resources Solutions Outsourcing e-business consulting

Few of the full-service firms around

e-business consulting (accounted for 40% growth in 1998) which will be used for the following : building customer loyalty achieving market leadership optimizing business processes reaching new markets enhancing human capital harness technology manage risk and compliance

Ernst & Young Services Advice on tools in tax, accounting and corporate finance Corporate finance

Intensive use of internet Most Admired Knowledge Enterprise (MAKE) awardee through the Knowledge Web that gives access to more than 651,000

e-business Investment in Patent & license exchange, the first e-business marketplace for safe and efficient sale of patents, licanses and other intellectual property

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Consulting Firm

Services and Customers

Competitive Advantage Growth areas

Online security Risk management Valuation of intangibles E-business acceleration

documents and 700 Lotus Notes databases

Source: http://www.wetfeet.com According to the International Labour Organization’s

reference on Management Consulting, there are seven types of consulting organizations. These are ; (1) large multifunctional consulting firms; (2) management consulting services of major accounting firms; (3) small and medium-sized consulting firms; (4) sole practitioners; (5) consulting professors; (6) consulting services of management institutions; and (7) non-traditional suppliers of consulting services.

Large multifunctional consulting firms are firms referred to

as “full-service” management consulting firms which are able to provide “total service packages”. They are usually multinational consulting firms that prefer to serve large and multinational clients. They also usually develop specialized services to make their organizations competitive – specialization in either a sector or service. It is a debatable issue on whether offering a full array of services is a competitive advantage for these firms. Some would argue that the convenience of having a single “one-stop-shop” is worth it if one would not compromise the quality of service provided.

Major consulting services of accounting firms developed as

major accounting firms organized their MAS or management advisory services units. Recent years saw the growth of these units which made many big accounting and audit firms move towards the process of separating their auditing units with their consulting units. Ernst and Young sold its consulting unit to European powerhouse Cap Gemini Group for US $11.3 billion. Pricewaterhouse Coopers said that it would also separate its accounting and consulting divisions and KPMG has filed with SEC to spin off its consulting unit. Arthur Andersen and Andersen also has already split. The conflict of interest of the two units also made it proper to separate the two units. Management consulting firms which were developed from audit and accounting firms benefit from the expertise, image, reputation, client , contacts and assignment opportunities that these

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accounting firms provided. In the beginning, services offered by these firms are in the same lines of accounting and finance. But at present, it can be seen that services of these firms developed into other areas such as human resource, operations, information systems, control systems and even strategy management.

Small and medium-sized consulting firms embraces a variety

of organizations which may be limited to a (1) specific geographical area; (2) specific technical areas such as corporate strategy, training, quality control, ISO management, environmental auditing, compensation survey etc.; and (3) specific sectors in the market such as industries (textile industry, telecommunications industry, hotel and restaurant, insurance etc.) or markets (public sector, private corporation sector, government organizations and non-government organizations).

Sole practitioners or independent consultants outnumber

consulting firms. In the United States, 45 percent of all consultants are reported to be independents. They have some industry or functional specialization and get hired on a project basis either by another consulting firm or a client company. The existence of a number of sole practitioners point out to an interest of some organizations in the market to work with independent individuals. These consultants may either be a generalist or a specialist. A generalist emphasizes on a broad management experience, or problem solving and behavioural skills, A specialist works in a narrow technical area. Preference for independent consultants may arise from the need of the market for a highly personalized and flexible approach to problems. In addition, costs may also be a consideration. Most often than not, it is less expensive to hire an independent consultant as compared to getting a contract with a consulting organization. Sole practitioners may be able to work with organizations through informal networks. Small organizations may have more preference for individual consultants while larger institutions may prefer sole practitioners for smaller assignments or specialized tasks. In some instances, independent consultants are also able to get projects through formal networks with consulting organizations and firms. Consulting organizations and firms who need specialists in specific projects maintain a database of possible external consultants who can be tapped, whenever necessary.

Consulting professors are also independent consultants.

But they are different since sole practioners makes a living from consulting. Consulting professors are involved in consulting on an part-time but fairly regular basis. In the United States, recent years

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have seen the development of new ideas and perspectives from the university especially in the Professional Schools of Management . The main contribution of the consulting professors are these new ideas through the combined efforts in teaching, research and consulting and not merely routine consulting work. A small group has even evolved to attain the level of “guru” consulting”. Their output can be seen in a number of management books available and read by a number of executives worldwide.

Consulting services of management institutions are usually

found in developing countries to foster local management consulting capabilities. These may be in the form of productivity centers or business schools. Some may have full time consultants or would just have some staff and tap consultants from the institution’s teaching or research personnel.

Non-traditional suppliers of consulting services include

those whose main function is something other than consulting. The concept of adding value to one’s product led to the development of these group of consultants. Consulting is viewed as a means to add value to the products or services offered by the company. Some of the members of these group are the following: (1) suppliers and vendors of communication, and computer equipment; (2) computer software houses; (3) commercial and investment banks, brokers, insurance companies; (4) suppliers or equipment and turnkey projects in energy, transportation, drinking-water, irrigation, and other utilities; (5) economic, statistical, and sectoral research institutes and information centres; and (6) other organizations that have turned their internal management service groups into external consulting services. These non-traditional suppliers are also sometimes referred to as the “think-tanks” of the organization. Examples of services offered are strategic studies, model building, forecasting of consumer demand, systems analysis and design, and plant and office automation. Services offered are usually research or technology-based. But research should also not be equated to consulting. Research only forms as the basis of ideas in consulting but research itself is an independent process. Even in the classification of firms, a research organization is different from a consulting organization but are mostly interdependent.

Recent years also saw the growth of the number of internal

consultants in various organizations. They were formed to provide consulting services to other units in the same organization. There are many who criticize these internal consultants. Many say that they can be useful staff function but does not deserve to be called

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as management consulting because of lack of independence and objectivity. In some cases, what is done is to make use of both external and internal consultants to work in teams. As early as 1976, the Institute of Management Consultants in the United Kingdom agreed that the term independent practice “shall include consultants engaged as in-house consultants who meet the required standards of knowledge, experience, and competence and are free at all times to offer objective and independent advice”.

Competition. There is very high competition in the industry

as reflected by a market where according to Milan Kubr, “supply has matched and even outgrown demand”. This is indicated by the (1) increasing number of players that enter a market characterized by minimum legal barriers for entry; (2) growing sophistication of clients who become more selective resulting to the development of a number of new and specialized services to address the complexity of new management problems; (3) increase in efforts towards advertising and marketing of consulting services; and (4) continued internationalization of consulting firms.

Competition is usually based on the following: (1) skills and

expertise of consultant/s; (2) development of new executive management tools and/or services; (3) reputation/track record as an expert in providing the service; and (4) network/s of clients established by consulting firms/individuals; and (5) price.

Skills and expertise of consultants. Consulting is an idea-

driven profession. Consulting firms boom and fade as tools such as reengineering go in and out of fashion. But for majority of consultancies, the most important asset is still its people. Over time, consulting firms that do the best work for clients are the ones with the best people. Hiring of consultants is an important factor in the success of management consulting firms. Few consultants today get hired simply by being smart. Both service expertise and industry knowledge based on educational background and experience are prerequisites before being hired.

Development of new executive management tools and/or

services. As more and more complex management problems are being addresed by consultants, various services offered by management consulting firms are being developed and serve as one of the factors that drive competition in the industry. There are efforts made to increase long-term benefits derived by clients from consulting projects. Table 6 presents a profile of some of the management consulting services developed by various firms.

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Price. According to ILO, the basis of price for consultancy charges and fees are based on (1) salaries and fees of consultants which may vary depending upon the specialization, level, and experience of the consultant; (2) marketing policies such as fees charged by competitors, fees for different market segments, promotional fees for new services, subsidized fees for some countries through government financing of consulting services made for small enterprises, fees determined by clients (based on their budget allocation), and congruency of fees with consulting company’s image.

Table 6. Profile of various management consulting services offered

Management Consulting

service

Description

Prominent global firms offering the

service Strategy Consulting

Advisory, guidance and operational assistance to companies in the area of strategic planning for the next two to five years. This can involve choosing a strategy for growth , making suggestions for restructuring, providing international expertise, suggesting acquisitions/divestitures and revitalizing leadership.

A. T. Kearney (Chicago, IL) Advisory Board (Washington D.C.) Andersen Consulting Strategic Services (Chicago, IL) Arthur D. Little (Boston, MA) Bain & Co. (Boston, MA) Booz Allen & Hamilton (New York, NY) Boston Consulting Group (Boston, MA) Conner & Company (New York, NY) Braxton Associates (Boston, MA) Coopers & Lybrand (New York, NY) Corporate Decisions (Boston, MA) CSC Index (Cambridge, MA) Dean & Company (Vienna, VA) Delta Consulting group ( New York, NY) Gemini Consulting (Morristown, NJ) GeoPartners Research (Boston, MA) LEK/Alcar Consulting Group (Boston, MA) Linkage (Lexington, MA) McKenna Group (Palo Alto, CA) McKinsey & Co. (New York, NY) Mercer Management Consulting (Lexington, MA) Mitchell Madison Group (New York, NY) Monitor Company (Cambridge, MA) Parthenon Group (Boston, MA) Piper Trust (London, UK) Strategic Decisions Group (Menlo Park, CA) Strategos (Palo Alto, London) Symmetrix (Boston, MA) Vertex Partners (Boston, MA)

Systems Consulting

Advisory, guidance and operational assistance to companies in the area of optimal configuration of their information systems, integration of information systems, introduction of client-server computing, participating in software design and

Andersen Consulting (Chicago, IL) Arc Partners (New York, NY) Cap/Gemini America (Morristown, NJ) Claremont Technology Group (Seattle, WA)

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Management Consulting

service

Description

Prominent global firms offering the

service recommending hardware purchases. CSC Index (Cambridge, MA)

CTG Digital Consulting (Maynard, MA) EDS (Plano, TX) Ernst & Young (Chicago, IL) IBM (Armonk, NY) James Martin (Fairfax, VA) Princeton Consultants (Princeton, NJ) Simulate (Philadelphia, PA) Technology Solutions (Chicago, IL) Tower Group (Newton, Ma) Trans-Tech (Chicago, IL)

Process-Oriented Consulting

Advisory, guidance and operational assistance to companies in the area of increasing productivity by improving business processes.

A. T. Kearney (Chicago, IL) AT & T Solutions (Chicago, IL) Boston Consulting Group (Boston, M.A.) Coopers & Lybrand (New York, NY) CSC Index (Cambridge, MA) Ernst & Young (Chicago, IL) Hackett Group (Hudson, OH) JLA Consulting International (Toronto, CA) Price Waterhouse

Finance-Related firms

Advisory, guidance and operational assistance to companies in the area of finance such as pricing of securities, strategies for creating shareholder value, business valuation, economic forecasts and analysis or suggestions for Treaury management,

Andrew Kalotay Associates (Sea Cliff, NY) A.B. Laffer & associates (Los Angeles, CA) Boston Consulting group (Boston, MA) Coopers & Lybrand (London, UK) Hackett Group (Hudson, OH) Houlihan Lokey Howard & Zukin (Los Angeles, CA) Ibbotson Associates (Chicago, IL) LEK/Alcar Group (Boston, MA) McKinsey & Co, (New York, NY) Mitchell Madison Group (New York, NY) Stanford Consulting Group (Menlo Park, CA) Stren Stewart & co. (New York, NY) Treasury Management Associates (Aurora, Co) Wilshire Associates (Los angeles, CA)

Human resources Services

Advisory, guidance and operational assistance to companies in the area of making decisions on hiring, compensation benefits and packages, pension funding decisions, benefits of a diverse workforce, employee development programs, organizational learning and training.

A Foster Higgins Automated Concepts (Chicago, IL) Buck Consultants Cambria Consulting (Boston, MA) Forum Corporation (Boston, MA) Harbridge House The Hay Group Hewitt Associates (Lincolnshire, IL) HRStrategies (Detroit, MI) Linkage (Lexington, MA) Milliman & Robertson Management Science Associates SIA Consulting Group

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Management Consulting

service

Description

Prominent global firms offering the

service Sibson & Company (Princeton, NJ) Wyatt Group (Chicago, IL) Towers Perrin (New York, NY)

Source: http://www.cob.ohio-state.edu Recent trends in global management consulting, as shown

in Table 5, are moving towards the convergence of management and business processes and information technology such as e-business consulting making traditional consulting practices in danger of becoming less relevant in the Internet age specifically for private client companies. Information technology specialists are usually among the fastest growing sectors in the consulting industry. WTO separates IT services in a different subsector, however, some sectors in the industry consider them as direct competitors that eat a share in the market.

Reputation/track record as an expert in providing the service

Another source of competition is based on reputation and track record as an expert in providing the service. These are usually gained after years of experience and after handling a number of consulting projects on one’s specialization. Smaller and new players , at times, have difficulty and face stiff competition for lack of experience and track record as compared to larger firms. Clients would usually require a listing of previous consulting projects and clients of the consulting firm or individual together with the profile (academic achievement and working experience) of the consultants directly working with the firm.

In the internationalization of management consulting service

firms, the country’s image and reputation as a source of credible consultants with reliable management tools and services for specific clients’ needs also play an important role in the competition. US is now known for most of the management consulting services offered. Europe is known more for economic and financial management services offered.

Network/s of clients established by consulting firms/individuals. Lastly, the network/s of clients established by consulting firms/individuals is a major factor in industry competition. Marketing of services is usually based on personal networks, both formal and informal. These are usually gained through exposure to previous consulting projects and/or work experience of consultants, industry and/or professional associations. Larger firms have recently engaged in advertising to build its brand name and reputation.

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Customers . By location, the largest market was estimated

to be in the US where a US $ 15.2 billion was spent for management consulting services industry in 1992, followed by Europe with US$ 7.6 billion, and Asia with US $ 3.2 billion. The rest of the world spent an estimated US $ 2.3 billion.

The social, technological, economic and cultural

environment of business and government is changing rapidly. This corresponds to the changes in the customers and demand for management consulting services. The changes are characterized by : (1) increasingly sophisticated clients who, on their own, can handle present management problems formerly handled by consultants; (2) increase in need for consultants who can handle difficult, risky and new tasks that would require a great amount of information, speed of analysis and action ; (3) an approach to problems with an interdisciplinary, intersectoral perspective, innovative, with understanding of social and environmental implications; and (4) availability of special expertise.

Trends also indicate that downsizing in recent years in many

companies led to increase in demand for consulting firms to carry out activities that companies no longer have the in-house staff to perform. Outsourcing of information systems, market research, human resource planning, sales force development, and strategic planning have been demanded by corporations. At the same time, downsizing resulted to increase in number of former executives who become consultants.

Also, a fresh demand for consultants to install electronic

commerce systems and re-engineer business processes to take advantage of internet fluorished in the past years. This type of services is expected to lead to increase revenues to at least 12 percent in 2000 to US $113 billion annually. These trends gave rise to new players who offer purely internet-based services. Some of the biggest consulting firms in this area are Viant and Scient. These two, along with other internet consulting firms had affected the big management consulting firms that lose e-commerce deals with clients. The scenario had led many consulting firms to undergo their own e-business makeovers. They have been either attracting young, technical people into the company or have been forming partnerships with technology firms.

The buyer of consulting firms usually decides on the

selection of the consultant based on (1) track record; (2) reputation ; and (3) price. Good consulting remains expensive. Depending on

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the type of work, fees can range from US $ 100 to US $ 500 per hour. Fees have not risen significantly for 30 years, after adjusting for inflation.

Suppliers. There are two major resources of management

consulting firms, these are the human resources and technology. Human resources refer to quality and quantity of consultants

recruited and developed by management consulting service firms. Table 4 presents the number of consultants in the world’s largest firms. These are made up of generalists and specialists. They come from various disciplines. The nature of services offered by the firms determine the type of expertise needed by the management consulting firms. Recruitment of consultants are usually based on the following criteria: (1) personal qualities like confidence, sense of organizational climate, integrity, and interpersonal skills, among others; (2) education which may range from a college level for staff to masteral and doctoral level for consultants; (3) practical experience based on quality and years of experience in the industry; and (4) age at which candidates are recruited.

The two major sources of human resources are business

enterprises and universities. Some consulting firms advertise in business and management journals and periodicals. Others also go to schools, particularly professional business schools and recuit MBAs who may start as a new staff and eventually be trained as a junior to senior consultant or even a partner.

Technology refers to development and implementation of

new management tools and services based on information and ideas. The suppliers of ideas are basically the consultants. Information is obtained from journals, books, and other publications as well as information resource centers like the government, academic institutions and industry associations. Consulting firms depend on a strong database of information so as to make a good analysis and provide wise recommendations to clients.

In recent years, the movement of the customers towards

internet-based technologies also led to increase in the need for technology firms to supply the needed software technology and infrastructure needed by management consulting firms. E-commerce and internet software firms are eager to build long-term support for their products, particularly at the largest corporations. One of their ways is through people like the management and technology consultants who often install and maintain enterprise-

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level software and processes. Microsoft recently irked a US 1 billion pact with Andersen Consulting to create a new firm called Avanade. It will make Microsoft a preferred vendor for Andersen clients. Twenty-five thousand Andersen employees will receive training in Microsoft products and Avanade will hire 3,000 technologists to work exclusively on Microsoft-related installations. Similar deals have been signed by KPMG and Cisco and KPMG and Qwest. These are seen to strengthen the management consulting firms but on the other hand, it will also limit the consultancies’ customer diversity especially when certain IT platforms or hardware fall out of favor.

Substitute services and New entrants. Management

consulting services are as diverse as the problems posed by managers and executives. This very nature of a highly evolving and diversified service makes it difficult for substitute services to come in. But the advent of information technology resulted to the role of IT providers as both suppliers, new direct competitors, and substitutes depending upon the type of IT provider. Services offered by internet-based consultancies became substitute products for reengineering solutions and efforts of traditional management consulting firms. While some technology firms tie up with management consulting firms to either broaden services pr converge with services provided by management consultancies. There is also a rise in the growth of purely e-business consulting firms. And this poses a threat to the management consulting firms. 1.2.2 Philippine management consulting services industry

The Philippine’s weak database, particularly for a relatively

small sector such as management consulting services, makes it difficult to have current and reliable data on this dynamic and evolving industry. Nevertheless, because of the nature of the management consulting services industry of being internationalized, then there are a number of trends in the global management consulting services industry that is also reflected in the local management consulting services industry.

Contribution to the economy Based on the original figures,

the business and management consulting services industry, contributed 0.62% to the Philippine economy and 21.24% to the business services industry in 1994. The industry reported PhP 6.7 billion in revenue sales in 1994 which is 20.18% of the total revenue/sales of the business services industry. There are a total of 9,376 employees in the sector. This is 5.01% of the total

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employment in the services industry and 0.04% of the total employment in the Philippines. Since the PSIC definition followed by NSO includes activities of management holding companies and do not include output of management consulting services rendered in accounting and audit firms, engineering consulting firms, market research and technology consulting firms then these estimated figures would not really represent the real output of the industry. Nevertheless these estimates would give some indications on the size of the industry. This means that the output of firms whose main activity is management consulting contributed not more than 0.62% to the Philippine economy (if the management holding companies’ output is excluded) in 1994.

Table 7. Contribution of the business and management consulting services to business services industry,1994 (values in thousands of pesos)

Size of firms

Gross Value Added

Percentage contribution on GVA of business services industry

(%)

Revenue/ Sales

Percentage contribution on Revenue/ Sales of the

business services industry

(%)

Employ-ment

Percentage contribution

On employment

in the business services industry

(%) Small firms (less than 10 employees)

115,617 6.69 243,824 7.77 1,190 4.82

Large firms (10 or more employees)

4,633,649 22.46 6,456,294 21.47 8,186 5.04

Total 4,749,266 21.24 6,700,118 20.18 9,376 5.01 Source: 1994 Census of Establishments, National Statistics Office

To assist in having more reliable estimates in determining

the profile of the Philippine management consulting industry, the available government data which primarily used the PSIC definition would still be presented but to be complemented by some data obtained through validation. Validations were made either through telephone survey or through internet research to obtain a listing of firms whose main activity is management consulting.

Sources of data came from the listing of the SEC’s Top

12000 firms from 1996 to 1998 and Top 5000 in 1999, SEC’s listing of registered firms under business and management consulting sector, the Institute of Management Consultants of the Philippines’ directory of members and existing internet and telephone directories. Although limitations of the validation include the following:

1. Data is mostly limited to corporations. Majority of the players as indicated through NSO data are small firms

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which may have been established as single proprietorships and partnerships but their number and sizes cannot be verified due to lack of available data.

2. Data do not include individual consultants who also are included in the industry.

3. Data is limited to those with working telephone numbers and websites so that their existence is validated.

Classification of management consulting firms and other firms that deliver management consulting services. In the Philippines, management consulting firms can be classified in a similar manner as global management consultants which includes (1) large multifunctional consulting firms or “full-service” firms with the capability to provide total service packages but were able to develop specific core competencies; (2) Firms which started from accounting firms and now offers consulting services; (3) Firms which offer limited/specific areas or services for specific sectors/market in the industry; (4) Sole practitioners or independent consultants; (5) Consulting professors; (6) Internal consultants; and (7) Non-traditional suppliers of consulting services whose main activities are other than management consulting (suppliers and vendors of technical equipment, software, investment houses, economic, statistical and research institutes, and learning institutes) Some available information on major players in each of these subsectors are shown in the tables that follow. 1. Large Multifunctional consulting firms or “full-service” firms with

the capability to provide total service packages but were able to develop specific core competencies.

These firms mostly cater to both public and private sectors of

the market. They usually are engaged in delivering consultancy services to the largest players in the different industries, those companies which belong to the Top 1000 in the Philippines. They usually employ people from different fields of specialization and are usually affiliated with globally known and reputable consulting companies.

Table 8. Large multi-functional consulting firms or full- service firms in the Philippines

Company Name Description of Firm SGV & Company

The company is now considered as the largest multidisciplinary professional services organization in the country. Services are in the areas of business consulting, corporate finance, e-business, risk consulting, human capital development, outsourcing, and tax services. It is an Arthur Andersen company.

Louis Berger It offers professional consulting services in the areas of civil,

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Company Name Description of Firm structural, mechanical, electrical, and environmental engineering, program management, planning, environmental sciences, cultural resources, information services, economics, policy and management analysis, construction management and support. It is part of the global group of Louis Berger companies.

Accenture It is formerly known as Andersen Consulting and affiliated with SGV & Company. It offer business consulting and technology solutions. The Business Consulting office offers services in the areas of strategy and business architecture, change management, business processes, customer relationship management, finance and performance management, human performance management and supply chain management. The Technology Business Solutions Center provides solutions engineering, solutions operations , technology research and management services.

EDS International The company has the capability of offering services in four business lines: Management consulting, e-Solutions, business process management and information solutions. The Management consulting is provided by AT Kearney, a global player in management consulting which was acquired by EDS..

Manila Execon Group It is an affiliate of the global company Kepner-Tregoe engaged in services related to strategy formulation and implementation, workplace transformation, systems and cost improvement, redesign of human performance system, and skill development.

Iberpacific It is the Asia-Pacific consulting subsidiary of Soluziona Internacional of Spain and also gets its experience and expertise from another company which is Meralco. It provides consulting services in the areas of business intelligence, enterprise resource planning solutions, internet consulting services, IT services, and customized services in the areas of public works development, in the energy sector and environmental management technologies.

Pricewaterhousecoopers

The company offers strategy and general management consulting services, financial amnagement consulting, organization and human resources development consulting, and information technology consulting. Pricewaterhousecoopers It is presently affiliated with Joaquin Cunanan & Company

Leverage International Consultants

The company provides a comprehensive range of research and consulting services such as strategy consulting and facilities management, management services, project development services , project planning information technology services, and export development services for both public and private sector clients.

Neville Clark Phils The company is an affiliate of Neville Clark absed in UK. Services include consulting and assiatnce of executives in the areas of manufacturing systems development, new product introduction, operational performance improvement, business integration, supply chain management, change management, problem centred training, business re-engineering, benchmarking and strategic application of technology.

DTT (Deloitte Touche Tohmatsu) Consultancy (CL Manabat & Company)

The company is presently affiliated with CL Manabat & Co. after its disaffiliation with Diaz, Murillo and Dalupan. It provides general business advisory services, financial advisory, business development and strategy consulting, tax services, outsourcing services and audit services.

AYC Consultants, Inc. The company offers services which includes market research, feasibility studies, country risk analysis, investment assistance, strategic planning, policy research and conference organization.

2. Firms which started from accounting and audit firms and now

offers major consulting services

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Accounting and audit firms usually have management service units to deliver consultancy services to their clients. But as the global industry moves towards separation of the accounting and audit unit with the management services unit to safeguard controls and conflicts of interest, the Philippine accounting and audit firms also has moved towards affiliation with some of the biggest consulting firms which also started as accounting firms to strengthen their management services competence. Initially, core competence remains to be in the area of financial management consulting. But eventually, as what happened to SGV & Company, these companies evolve into companies that are capable of offereing full-package services to its clients.

Table 9. Firms which started from accounting and audit firms and now offers major consulting services

Company Name Description of Firm KPMG (Laya- Mananghaya) The company offers general management consulting services. KPMG

was formerly affiliated with Diaz, Murillo and Dalupan and is now presently affiliated with Laya Mananghaya. At present activities are mostly concentrated in financial management consulting.

DTTI Consultancy Phils (Diaz, Murillo, and Dalupan)

The company offers general management services and financial management services. It was formerly affiliated with Deloitte Touche Tohmatsu until its disaffiliation in 1999.

Alba Romeo Management Consultants

The company specializes in auditing but offers consulting services in human resource, general management, information technology and legal areas. It is presently affiliated with BDO.

RM Management Consulting The company offers general management consulting and auditing, accounting and tax services.

DTT (Deloitte Touche Tohmatsu) Consultancy (CL Manabat & Company)

(see previous table)

SGV & Company (see previous table) Pricewaterhousecoopers (Joaquin Cunanan)

(see previous table)

3. Consulting firms which are limited to offering services in specific

areas or a specific market/sector/industry

There are management consulting firms who remain to offer services in either limited areas or only to a specific sector or market. This may arise as a result of two existing situations. One, the company may not be big enough, therefore lack the resources and capability of expanding its present line of services or hiring other people specializing in different areas of expertise. Second condition is when a company deliberately decided to concentrate on a particular niche in the market through differentiated services or serving a specific sector/industry/sector.

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a. Firms concentrating in specific, limited areas like general management, human resource, prodiuction, marketing, franchising, financial management, risk management and development or policy studies

General Management

Companies who offer general management services are usually small to medium sized businesses who customized their services according to the needs of their present clients. These companies do not usually require consultants or personnel who have very specialized areas of expertise.

Table 10. General Management Consulting Firms

Company Name Description of Firm Inno-Vision Strategic Development Consulting Inc.

The company was only formed last year (2000) by educators from De La Salle University-College of Saint Benilde to help Philippine entrepreneurs in the various facets of business.

BSA Sales & Management Consultancy, Inc.

The company offers services that are customized according to the needs of the clients in the various areas of business such as marketing, human resource, operations and finance.

CLRV Neo-Synergy The company is Filipino owned and concentrates on delivering general management consulting and financial services.

Human Resource Management

These companies usually offer services in the field of human

resource management. At times certain companies concentrate on executive recruitment consulting, training, organizational development, change management, or employee benefits and compensation.

Table 11. Human Resource Management Consulting Firms

Company Name Description of Firm Impact Consultancy Group, Inc

The company is a professional human resource and organizational development consulting firm engaged in training and top management consulting.It serves both private and government clients in the Philippines and its ASEAN neighbors.It is affiliated with Strategic Consulting Services nternational, a UK-based worldwide management consulting firm granting IMPACT with the license to use programs and systems developed in its worldwide network of offices.

Asia Business Consultants, Inc.

The company’s core competencies include manpower development and training programs/services, executive recruitment, strategy formulation, feasibility and industry studies and institutional development

Ancilla Enterprise Development Consulting

The company is affiliated with Enterprise Development group in US. It offers consulting, training and research studies with its core foundation in human resource and organization development.

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Company Name Description of Firm Guthrie Jensen Consultants, Inc.

The company is a training and management consultancy firm that offers a wide range of programs in the area of organizational development, sales and marketing, sutomer relations, and organizational communication. Services include public and in-house seminars as well as customized training programs for executives, management, supervisors, sales, and service personnel.

George Garrett Guillford Management Consultants

The company offers executive search and recruitment consulting services.

Ward Howell ZMG The company offers executive search and recruitment consulting services.

John Clements Consultants, Inc.

The group has seven companies that specialize in the area of recruitment. It offers specialized services in the areas of executive, staff and technology employees recruitment. Processing and documentation for the dispatch of employees to other countries is also done by the company. It also has a Human resources Development Consulting Division that provides development and design of training programs for clients and conduct of public seminars for clients from different industries.

Asia Partnership Philippines (APPI)

The company is an international executive search/recruitment consultancy. The company searches for middle to senior management level professionals. It specializes in “cross-cultural” recruitment giving attention to the corporate culture of its clients that come from different parts of US, Europe and the Asia-Pacific.

Amrop International The company is a partner of the international executive firm Amrop International which has 81 offices in 52 countries. Services include executive search , management audit and assessemrent.

Watson-Wyatt Phils This global consulting company deliver services in two specific areas that were combined: financial management and human resources management. Services include benefits consulting, investment consulting, insurance and financial services, human capital development, Strategic Rewards® which aligns rewards system to strategy of company and human resource technologies.

Solutions, Inc The company provides human resources consulting (job evaluation, development of salary structure and employee communication), employee benefit consulting , risk management consulting and broking services (insurance).

Aedan Associates The company offers training services for employees and at the same time engage in the recruitment and testing of personnel for its clients

Stream Training Consultancy

It is a training company that offers training development programs for supervisory training, team building, improvement of selling skills of sales people and planning skills improvement.

Financial Management These companies offer advisory services in the areas of

investment, cost management, profit improvement and portfolio management.

Table 12. Financial Management Consulting Firms

Company Name Description of Firm Capital Strategies The company provides independent corporate finance advice to

companies. It is affiliated with Capital Strategies at UK. Equity Managers Asia, Inc The company is a purely Filipino-owned company engaged in offering

financial advice to local clients. Incuventure Asset Managers The company is a purely Filipino-owned company engaged in offering

financial advice to local clients.

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Marketing Management

These companies offer consulting services related to Formulation and implementation of specific marketing strategies such as customer loyalty programs, direct marketing, image building and other areas.

Table 13. Marketing Management Consulting Firms

Company Name Description of Firm Motivation Asia Phils The company is affiliated with Performance Asia Group and Motivation

Asia Thailand. It focuses on consulting and research services in the area of Strategic Incentive and Loyalty marketing solutions. .

TeamAsia, Inc The company is a corporate communications consulting firm with core competencies in events conceptualization and management, direct marketing and promotion, and corporate identity development. The company also organizes public seminars where world-renowned international business leaders and gurus are invited as speakers. It established a company in Hongkong that specializes in training.

Production/Operations Management Table 14. Production Management Consulting Firm

Company Name Description of Firm Asiatech Resource Management Corporation

The company addresses the requirement of the manufacturing sector for expert advice and assistance on program, project and technology management. Services include consulting regarding plant and process definition and design, cale up implementation, project feasibility and financial study, process optimization, equipment fabrication and installation, industrial plant set up, contract management, equipment repair and maintenance and other special projects and services.

Risk Management

The companies found to specialize in risk management consultancy are usually affiliated with UK-based companies where risk management consulting is a common practice.

Table 15. Risk Management Consulting Firms

Company Name Description of Firm Pinkerton Consulting, Inc. It is a company affiliated with Pinkerton Consulting and Investigation

Services UK, the largest and most established commercial investigation agency in the world with over 60 offices globally. The company offers sull service in the area of intellectual property , investigative business and security audit and consultancy.

Control Risks The company is affiliated with Control Risk in UK and is engaged in the business risk consultancy service. It includes political and security risk analysis, confidential investigations, pre-employment screening, security consultancy, crisis management and response and information

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security and investigation. Development and Policy Studies

There are also a number of companies that concentrate in consulting services in the development work area such as agriculture, fisheries, forestry, environment, gender issues, local governance, agribusiness, economics, industry studies, rural and urban planning and community development. Clients usually are concentrated on government and international funding institutions. Linkages are usually established with non-government organizations, academe and research institutions. Companies in these sector usually gain ground for international exposure. Projects usually require multidisciplinary skills from economics, business, engineering, development studies, social sciences, agriculture and environmental sciences.

Table 16. Management Consulting Firms involved in development and policy studies/work

Company Name Description of Firm Madecor Group The group of companies in Madecor specializes in providing

consultancy, training and management services to development projects of government agencies as well as the private sector in the Asia Pacific.

Orient Integrated Development Consultants, Inc.

The company provides consultancy, training and management services to development projects of government, private institutions, research institutions and academe. Services include areas like integrated regional/rural/area development, environmental resource management, institutional development and local governance.

Pacific Rim Innovation and Management Exponents

The company offers services to both public and private sectors ranging from pre-investment and feasibility study preparation to detailed engineering design, project management, project benefit monitoring and evaluation, design of management information systems, policy review and formulation, design, packaging and conduct of training programs, and organization of national and international conferences.It is presentlyr egistered in the roster of consulting firms of ADB, World Bank and FAO.

SEA Consultants The company’s core competencies include institutional strengthening, capacity building, training, policy and planning, and financial management in agriculture, finance, areas of urban and regional development, education, toursim, transportation and forestrty.

Economic Development Foundation

The company was first established to serve as private management consultancy and training unit for private firms. Eventually it evolved into a company that focuses on project management, implementation, training, organizing, advocacy, and research in major areas of concern like reforestation, environmental and coastal resource management, and environmental training.

IDP Consult, Inc. The company is based in US and specializes on development, economic and policy studies. Many of its projects include those in Asia-Pacific region particularly USAID projects.

Associated Resources for Management and Development, Inc.

The company is involved in designing and conducting training programs for micro-enterprises, human resource planning and development, community organizing and mobilization, installation of micro-finance systems, design and conduct of socio-economic surveys.

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Franchise Management

Table 17. Franchise Management Consulting Firm Company Name Description of Firm

GMB Franchise Developers and Consultancy Firm

The company assists clients to develop their franchise system and assist entrepreneurs who wanted to engage in franchising.

Business Recovery/Turnaround

Table 18. Management Consulting Firm involved in business recovery and turnaround

Company Name Description of Firm Business Recovery and Turnaround, Inc.

The company specializes in restructuring, recovery, rehabilitation and turnaround of companies and businesses in the Philippines and the Asia-Pacific.

b. Consulting firms which are limited to offering services for

specific sectors/industry/market

These companies usually concentrate on specific industries or sectors such as health services, pharmaceutical industry, tourism industry, fisheries sector, construction industry, sugar production, telecommunications or export companies. The consultants in these firms usually have significant years of exposure and experience in these sectors. They also have a wide array of linkages with the different professional and industry associations in these sectors. They play an important role in their specific sector to provide sound advice and information needs.

Table 19. Management Consulting Firms which are limited to offering services for specific sectors/industry/market

Company Name Description of Firm Asia Pacific Projects, Inc. The company specializes in providing strategic planning, general

management, marketing, economic, and human resource development advisory services for the tourism sector. It also prepares and conducts training programs in hospitality and travel through its training arm, the Asia Pacific Tourism Training Institute.

Meganomics Specialists, International, Inc.

The company offers consulting and research services in the area of agriculture (including fishery, natural resources and environment). It has a

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Company Name Description of Firm distinctive competence in agribusiness, sustainable urban and rural development, food security, financial, sociological, market, production, processing, and post-harvest feasibility studies.

Isis Research Phils The company is part of Isis Research with global headquarters in London 16 offices worldwide. The company specializes in providing qualitative and quantitative healthcare market research services. Services include providing informed interpretation of research results and recommendations to clients. Focus is on healthcare services and pharmaceutical industry. Isis Philippines offers an omnibus study run quarterly among general practitioners, internists and pediatricians.

Rider Hunt Liacor It offers a number of professional services aptly described as “Cost Management through all stages of the construction process”. This includes preparation of budget estimates, assistance in value engineering, preparation of cash-flow projections, assist in the pre-qualification of contractors and suppliers, preparation of bid documents, issuance of bid bulletins, contract negotiations and finalizing the contract agreement. The company focuses on serving customers in the construction industry.

Code Red Consultancy The company is affiliated with the UK-based Code Red Consultancy. It’s focus is mainly on providing consulting for the finance sector to help them maximize their returns through effective use of technology in meeting business goals.

Consultancy by Technicus Corporation

The company works in close cooperation with Deutsche Telekom asia Pacific regional headquarters in Singapore. It provides technical resources and assistance in the area of telecommunications. Isla Communications Co. is among its customers.

CADP Consultancy Service The company is affiliated with Cantral Azucarera de Don Pedro, a major player in the sugar industry. CADP Consultancy Service provides training and consultancy services in the area of sugar operations. Most of its clients are from abroad who are provided with a share of the internationally-recognized management capability, sugar engineering technologies, and processes in sugar manufacturing with start-up sugar operations.

Wright Business & Management Consultancy

The company specializes in assisting clients in procedures involving setting up business inside any of the Philippine economic zones. The company provides pre-operations and pre-registration assistance to its clients such as SEC and PEZA registration, preparation of project feasibility studies, site selection etc.)

4. Sole practitioners or independent consultants and consulting

professors

There are numerous independent consultants and consulting professors in the Philippines. Some of them practice consulting on a full-time basis while many of the consulting professors practice consulting on a part-time basis. These consultants were able to get clients based on previous association with these private companies or public institutions. They are usually known for a specific expertise that they have. Clients are usually obtained through personal contacts, referrals or through their position or status in the institution where they work or teach. There are already some consultants who advertise their expertise and services they can offer through the internet.

5. Internal consultants

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In large client companies, they form their own corporate

planning units or departments to serve as internal consultants in the company. In some cases, these units are even spinned-off to become profit centers and become management consulting companies themselves by expanding their market to include not only their mother company but other clients as well.

6. Non-traditional suppliers of consulting services whose main

activities are other than management consulting (suppliers and vendors of technical equipment, software, investment houses, economic, statistical and research institutes, and learning institutes)

Technology-based consulting In recent years, technology based consulting firms have emerged out of the need for new business solutions that would adapt to needed technology. These companies usually arise from software vendors and distributors which eventually ventured into offering full-packaged services from information systems planning to systems analysis to systems design to systems implementation and monitoring. At present, the services offered by these firms have eventually have become more sophisticated and more comprehensive to include what is presently known as Enterprise Resource Planning (ERP) and e-business solutions. Whereas before, these firms have targeted only specific units in the company such as the finance and accounting department and the sales department or the warehouse and purchasing departments for their computerization needs, at present, a total company package is offered to client companies. These involves a reevaluation of business strategy and objectives to determine necessary information technology solutions that could assist in achieving these objectives in the various units of the company and a total business process reengineering.

Table 20. Technology Consulting Firms Company Name Description of Firms

WeServSystems International

One of the largest players in the software industry. It is the software subsidiary of Fujitsu Philippines and provides technology based consulting and solutions related to systems development, implementation and maintenance.

IEWorks The company started out as a training and consulting organization. At present it is involved in delivering e-commerce and web site solutions, enterprise data modeling or business process reengineering and staffing services.

MisNet The company provides technology based consulting focusing on Customer Relationship Management and E-business solutions to

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Company Name Description of Firms integrate business processes and technology solutions.

Corporate Information Solutions

A subsidiary of Meralco which was formed from the Accounting and EDP departments of Meralco in the 1970s. The company provide technology based consulting and solutions related to information systems planning, business reengineering, and systems integration.

Headstrong A new company formed after the merger between digital business management consultancy firm James Martin and investment firms Welsh, Carson, Anderson, Stowe and Hambrecht & Quis Asia Pacific. It offers technology based consulting and business solutions in the Asia Pacific.

Asian Computer Group The company is affiliated with Systems Standards Incorporated and engaged in customized software solutions, project management, programming services, IT consultancy, facilities management, networking, systems integration and IT education/training.

CM Technologies, Inc The only member of IMPHIL concentrating on consulting in the area of information technology. Services include computer programminf and hardware.

Ayala Systems Technology A company which was formed as a joint venture of Ayala, BPI, Mitsubishi Corporation, and ST (Singapore Technologies) Computer Systems and Services, Ltd. Services include systems integration, systems development, networking and communications.

Engineering Consulting Firms

Engineering consulting firms usually require project planning, feasibility study preparation and advisory services in the area of project management which is usually the expertise of management consultants.

Table 21. Engineering Consulting Firms

Company Name Description of Firm Cedco Incorporated The company offers a complete range of services from project sourcing,

conceptualization in the areas of engineering, economics, environmental management, technical management services, and policy sciences.

ProConsult, Incorporated The company offers advisory and review services, planning services, design services, project management, environmental impact assessment, and traffic studies.

Schema Konsult, Inc. The company offers multidisciplinary services in the areas of engineering, architecture, project and construction management and project economics.

SP Castro and Associates The company is a project management and consultancy organization. It is the country’s first 100% Filipino-owned company certified in project management and construction management.

Asian Technicon Managers & Consultants, Inc.

The company offers services in the areas of project management, construction management, quantity surveying, technical evaluation, feasibility studies and master development planning.

SFI Management Consultancy

The company is engaged in consulting services in the area of property management, construction and engineering project management, technical services and human resources management.

Business Intelligence Units

These companies usually provides venues for information

sharing through printing, publications or through the internet. They also provide technical and trends analysis to assist executives in planning and decision making.

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Table 22. Business Intelligence Units

Company Name Description of Firms Property Market Intelligence (PMI) Asia, Inc.

The company is a provider of Asian property market research information and technical analysis through internet. It is affiliated with PMI based in Hongkong and serves primarily the Asian real estate industry.

Economist IntelligenceUnit Philippines (EIU)

The company is an associate of the London-based EIU which is engaged in publishing, research and conference organization. The company conducts quarterly roundtable meetings and peer-group meetings among clients to update and assess prevailing economic, political, social and business conditions as well as corporate operating experiences and concerns. It also regularly provides information through its publications such as The Philippine Alert, The Philippine weekly update, On-call Information Service, and annual corporate surveys of MNC performance and CEO salaries and benefits.

Market Research

The expertise of market research firms usually lie on their capability to offer market research studies and information that are based on a well-developed technology of data gathering, analysis and interpretation. In the field of marketing, they provide marketing consulting advisory services in the form of recommendations on specific marketing strategies to be implemented based on the results of the study.

Table 23. Market Research firms

Company Name Description of Firms Trends-MBL The company is part of the MBL group worldwide providing strategic

planning, research, and consultancy in management and marketing. Services include quantitative and qualitative market and product studies including branded services such as IdeaMap®, and MarketMind Monitor ®

AC Nielsen (Pulse) The company is formerly known as Pulse Group which includes Media Pulse, Consumer Pulse and Dealer Pulse. The company affiliated with ACNielsen, one of the biggest global marketing research firms. It provides retail measurement services, market modeling and analytical services, customized researchs ervices, sales development services, merchandising services, media intelligence services, computer industry services, decision support services and ombnibus surveys.

PSRC-Research International

The company is one of the leading market research organizations in the Philippines. It provides full service market research services through business and research consultancy. It includes customer and product researches, service measurement, and branded solutions such as Equity engine ®, Loyalty Driver ®, Trace®, and SMART® among others. It is affiliated with the Research International group. It is formerly known as Philippine Survey Research Center.

Taylor Nelson Sofres (Frank Small & Associates)

The company is formerly known as Frank Small and Associates. It is a full service marketing and business research firm. It is independently audited each year by Ernst & young for compliance with QCSI (Quality Control Standards for Interviewing), an ISO 9000 compliant award. It offers omnibus surveys, advertising and consumer research and product testing. It also has branded solutions like Optima®, NeedScope®, and Miriad®.

AGL Market Research The company was newly incorporated in 1999 to provide market research services such as consumer and product researches, brand performance studies, advertising research, sales and distribution research, industrial research, feasibility studies, and corporate image research.

53

Company Name Description of Firms FS & Associates Applied Marketing Research, Inc Asia Research Organization Dynamic Research Feedback Incorporated

These companies offer market research services such as product and consumer studies, brand performance studies , advertising and product testing research.

Investment and Financing Companies Table 24. Investment and Financing companies

Company Name Description of Firms Walden AB Ayala Management

The company is a joint venture between Ayala Corporation, and AB Capital. Its main activity includes managing a US $ 19.7 million country fund in the Philippines. Consulting activities include such areas as assiatnce in the executive recruitment, corporate and business planning, strategic alliances, fund raising and public listing of companies where Walden has an investment portfolio in.

Learning Institutions/Academe and Non-Government

Organizations

There are non-profit institutions and organizations such as academic institutions, professional schools and non-government organizations that are also involved in research and consultancy. In non-government organizations (NGOs) are some NGOs whose objectives include provision of training and consultancy to the sectors that they serve. They usually tap local and international funding institutions to implement their projects. There are a number of NGOs who either tap external consultants to do some research and consultancy work for them or there are some who develop their own capabilities for the said purpose. Academic institutions on the other hand is slowly expanding their function not only as learning institutions but as research institutions as well. A study made by Edralin (2000) for the Commission of Higher Education pinpointed that among higher education institutions (HEI), there are 48 existing public and private schools out of the 198 HEIs surveyed nationwide which have research and development linkages with private sectors and local and international funding institutions for various areas of study . Twenty seven (27) are public HEIs and 21 are private HEIs. The details of the nature of their research projects and

54

donor institutions are shown in Appendix A. Some of the research projects are academic in nature but there are also a number which are applied researches and dwell on development studies which are similar research studies prepared by management consulting companies. For consultancy, there are twelve (12) HEIs found to have formal consultancy linkages with private and public institutions. The nature of these consultancy linkages and the institutions they are usually affiliated with are shown in Appendix B. Again, many of these consultancy linkages are similar to services offered by some of the management consulting companies.

Table 25. Learning and Academic Institutions and Non-Government Organizations

Institution Description of Firms Center for Leadership and Change

The company is primarily responsible in delivering the Franklin Covey Workshops and Programs for business students, professionals and executives. The programs include Seven habits for highly effective People, Time Management, Leadership, Creating Synergy, Building trust etc. Some of these workshops are also made available through the Ateneo Professional School.

Integrative Learning International

The company provides the necessary tools and training needed by clients through its “organizational development platforms of integrative learning technology” . Workshops and seminars are conducted in Manila and in other Asean neighboring countires.

Center for Empowerment & Resource Development

The company is a non-profit organization engaged in development consulting, research and work for small fisherfolk and women in the Fiheries sector. Services include project management, monitoring, evaluation, research, education/training, and institutional development.

Institute of Public Health Management

The institute is a non-stock, non-profit organization that offers health management training programs, promote practitioner-oriented research through research and technical assiatnce, develop health policy frameworks, assist in capacity building, project development and evaluation. They cater to some projects of the government and funding institutions.

SEAMEO regional Center for Graduate Study and Research in Agriculture

The company is involved in agriculture consulting. Clients include both local and government institutions. It is based in UP Los Banos.

Peak Ground Institute of Policy Research, Inc

It is an interdisciplinary institution specializing in business, economics and public affairs. Services include business research and consulting, public policy research and consulting, and advanced human development programs such as the Advanced Management and Executive Development Program and Corporate In-house Program. The company is primarily based in Bacolod City.

State Universities such as: UP Diliman, UP Manila UP Los Banos Mariano Marcos State University- Ilocos Cagayan State University, Mindanao State University

State universities and colleges are really mandated to conduct researches and extension work which usually come in the form of advisory, training and consultancy work to assist in economic and social development of the country. A number of consulting professors as well as research institutes within these learning institutions have been able to establish strong affiliation with the private sector as well as local and international funding

55

Institution Description of Firms MSU-Iligan Institute of Technology Central Mindanao University Silliman University

organizations enabling them to delvier similar services as consulting companies in the area of development work, agriculture, industrial technology, engineering, economics and social sciences

Private universities and professional schools such as De La Salle University Ateneo de Manila University Asian Institute of Management University of Asia and the Pacific University of Sto. Tomas Mapua Institute of Technology University of the East Notre Dame University- Cotabato St Louis College-Baguio University of San Carlos

The Commission on Higher education is pushing for further involvement of academic institutions in research and consultancy. These institutions are usually recognized to become Centers of Research in different regions and more and more professors are engaged in research and consultancy work as part of their total professional development. Unlike public state universities who have budget allocation for research through DOST, a number of private schools have to invest heavily on organizing research centers as well as providing incentives for professors to do research work. These research centers conduct their own marketing efforts to bid for research and consulting projects to the different funding institutions.

Internet-based service providers

There is also an emerging trend with the increase in the use of the worldwide web to reach more customers. There are firms based in other countries which are offering on-line services and pose a threat to similar consulting and advisory services offered by traditional consulting firms. An example of this is the provision of on-line and interactive training workshops and tools. These kind of services replace the traditional workshops conducted by management training consultants.

Table 26. Internet-based service providers

Company Name Description of Firms Career Systems International

The company is a Berverly Kaye company, an industry leader in the publishing of dynamic training materials distributed worldwide. The company delviers interactive workshops to assist in the development of the organization’s critical business needs and support retention and development of key organizational skills and competencies.

An analysis of the classification of the different management consulting firms would point out to an emerging trend towards greater diversity in the types of services offered, nature and scope of services offered, markets being served and a growth in the number of types of non-traditional suppliers of consulting services.

Number, Size and Location of establishments. There are a total of 435 consulting firms in the Philippines as of 1994 based on NSO’s census of establishments. This represents 4.89% of the total number of establishments in the business services industry. Small firms with less than ten employees dominate the industry.

56

Large firms comprise 37% of the industry. Since NSO also uses the PSIC definition, these figures include management holding companies and would indicate that management consulting companies would number not more than 435 as of 1994.

Since management holding companies are mostly large

firms the trend in the management consulting industry in the Philippines would pinpoint that majority of the players in the industry are small firms, with less than ten employees. But even if the market is dominated by a number of small firms, a big bulk of the revenues are shared by the bigger players in the industry.

It should be noted that these firms do not represent the

entire industry. There are still a number of individual consultants from academic institutions and independent management consultants.

Table 27. Number of establishments in the Philippines classified under Business and Management Consulting Services by size of employment

Size of employment Large establishments

(10 or more employees)

Small establish-ments (Less than

10 employees)

Total

Based on 1994 Census of Establishments

162

273

435

Based on 1996 Annual Survey of Establishments

157*

Not available

-

Based on 1997 of Establishments

171*

Not available

-

Source: National Statistics Office * includes firms that offers market research and public opinion polling services

Based on NSO data from 1994 to 1997, the number of business and management consulting establishments has been decreasing based on the 1996 and 1997 NSO figures. The figures even include establishments offering market research and public opinion polling services. Please refer to Table 8.

On the other hand, based on the information gathered from

the Securities and Exchange Commission, there are a total of 2,558 firms which registered under the classification of business and management consulting between January 1995 to November 2000. Out of the 2,558 firms, there are 418 that provided telephone numbers. Validation calls were made and resulted to having 318 numbers that are either residential/wrong or disconnected numbers, 6 firms which refused to give information, 51 firms which are still existing (employment agencies, engineering consulting firms, IT consulting firms, training firms and general management consulting firms), 9 firms which have been dissolved, and 34 firms which have

57

been misclassified (these are law firms, retail firms, restaurants, hotels etc.)

Majority of the management consulting firms’ main offices

are located in Metro Manila. However, there are also a number of firms and offices in major cities and business centers like Cebu City, Cagayan de Oro, Iloilo City, and Davao City.

Employment in Business and Management Consulting

Service firms. NSO figures point out that in the Philippines, the business and management consulting sector generated a total of 9,376 regular employment in 1994. It was estimated that 12.16% of the employees are managers/executives (senior consultants/partners). A large firm has an average of 51 employees and small firms have an average of 4 employees. Not reflected in these figures, are the independent consultants contracted out by the management consulting firms. It was estimated that there are around 25,060 external/independent consultants contracted by business and management consulting activities sector in 1994 based on labor statistics.

According to some consultants interviewed, the nature of the

business of being dependent on the projects available e.g. at some point in time ,some firms do not have projects, pushed some firms, especially the smaller ones, to maintain only a manageable number of employees, mostly senior partners/consultants to oversee the projects and some administrative support staff in the office. Independent consultants are just contracted for specific projects when their expertise is needed. The firms maintain a database of independent consultants to tap. These independent consultants may either be retired executives, professors and researchers from the academe, or part-time consultants. In some firms, the database includes both Filipino and foreign experts. The firms usually tap those that the senior consultants/partners personally know or those with whom the firms were able to work with in their previous projects. The independent consultants are selected based on their (1) track record; (2) reputation; (3) expertise; and (4) consultancy fees demanded. The decision of the management consulting firms to decide on the independent consultant to be selected will be based on the nature of the project, scope, expertise required, type of client, budget, and previous experience with the consultant. Therefore, management consulting firms who maintain and invest in building a database of independent consultants to be tapped and establishing networks and relationships with these consultants are also able to build their

58

capability to accept projects, even those that require some expertise that they do not have at present, in their firm.

Table 28. Nature of employment in establishments in the Philippines classified under Business and Management Consulting Services by size , 1994

Employment Unpaid and

Working Owners

Managers/ Executives

Other Paid employees

Total

Average Small establishments (less than 10 employees)

116

Not available

1,074

1,190

Large establishments (10 or more employees)

100

1,140

6,946

8,186

Total 216 1,140 8,020 9,376 % to Overall Total Average 2.30 12.16 85.54 100.00 Source: 1994, National Statistics Office

The business and management consulting service establishments expended a total compensation of PhP 1.3 billion to its employees in 1994. More than a third of these (38.25%) were allocated for managers/executives (senior consultants/partners) and more than half are for other employees. This allocation is presented in Table 11. Compensation for employees is 19.05% of total revenue/sales of the sector.

Table 29. Compensation in establishments in the Philippines classified under Business and Management Consulting Services by size, 1994 (values in thousands of pesos)

Compensation

Salaries/Wages

Managers/ Executives

Others

Employers’ contribution to GSIS, SSS etc.

Total Small establishments (less than 10 employees)

Not available

61,017

2,301

63,317

Large establishments (10 or more employees)

488,350

681,776

43,168

1,213,294

Total 488,350 742,793 45,469 1,276,611 % to Overall Total Average 38.25 58.18 3.56 100.00 Source: National Statistics Office

Financial performance of Business and Management consulting service firms. About two thirds of the revenue/sales of management consulting service firms were obtained from their main activities. Only a third are from other sources such as rental or property, equipment and other business services. Compensation represents a bigger percentage of revenues of small establishments (36.60%) as compared to large establishments (28.05%). The total costs incurred by the establishments also show that smaller establishments incur a bigger percentage of costs relative to revenues (55.36%), which is more than half of the

59

revenue/sales while large establishments’ costs represent 38.86% of their revenues.

Table 30. Financial Indicators for establishments classified under Business and Management Consulting Services, 1994 (values in thousands of pesos)

Large establishments (10 or more employees)

Small establishments

(less than 10 employees)

Total

Revenue Sales from ♦ Main Activity

% of total

♦ Other Activities

% of total

Total

4,325,252

66.99%

2,131,042

33.01%

6,456,294

172,989

70.95%

70,835

29.05%

243,824

4,498,241

67.14%

2,201,877

32.86%

6,700,118

o Compensation

% of total revenue/ sales % of revenue from main activity

1,213,294

18.79%

28.05%

63,317

25.97%

36.60%

1,276,611

19.05%

28.38%

o Costs % of total revenue/ sales % of revenue from main activity

2,508,611

38.86%

58.00%

134,983

55.36%

78.03%

2,643,594

39.46%

58.77

o Fixed Assets Capital-Output ratio

2,600,034

0.5611

528,108

4.567

3,128,142

0.6587

Source: National Statistics Office The leading expense items of establishments in the business

and management consulting service sectors include (1) Non-industrial services done by others; (2) interest expense; (3) electricity and water; and (4) materials and supplies. There is a similar trend for both large and small establishments in terms of the top major costs incurred except for the item on interest expense. Only large establishments incur significant costs for interest expense. This may be attributed to the very nature of the business and management consulting firms of having to allocate resources for projects in advance, at times leading to a need to

60

avail of loans. One of the difficulties of firms in the business is the collection of accounts from clients especially if these are from the public sector namely, government agencies and local government units. The leading item – non-industrial services rendered by others include building space rental, land rental and other services.

Table 31. Costs incurred by establishments classified under Business and Management Consulting Services, 1994 (values in thousands of pesos)

Large establishments (10 or more employees)

Small establishments (less than 10 employees)

Total

Type of Costs Costs

% (over total

costs)

Costs

% (over total

costs)

Costs

% (over total

costs) Materials and Supplies

209,421

8.35

25,693

19.03

235,114

8.89

Non-Industrial services done by others

824,197

32.85

68,753

50.93

892,950

33.78 Industrial services done by others

94,369

3.76

870

0.64

95,239

3.60 Fuels, lubricants, grease etc.

34,326

1.37

7,127

5.28

41,453

1.57

Electricity and water

342,181

13.64

7,507

5.56

349,688

13.23

Interest expense 600,029 23.92 6,568 4.87 606,597 22.95 Indirect taxes 63,624 2.54 5,901 4.37 69,525 2.63 Cost of goods for resale

170,503

6.80

12,129

8.99

182,632

6.91

Research and Experimental Development

58,122 2.32 - - 58,122 2.20

Others 111,841 4.46 434 0.32 112,275 4.25 TOTAL 2,508,613 100.00 134,982 100.00 2,643,59

5 100.00

Source: National Statistics Office

After validation of the major activities of the leading business and management consulting firms based on the Top 12000 corporations from 1996 to 1998 and Top 5000 in 1999, it came out that there are 34 firms whose main activity is management consulting. Please refer to Table 16. Financial performance of a sample of leading non-traditional providers of management consulting services is also presented.

It can be noted that many of the leading players industry

have foreign affiliations. There are also very few who are able to

61

consistently make it to the Top 5000. The profile of the firms if it will be referred back to Table 30 based on services offered is diverse. Except for Accenture and Iberpacific, many of the leading players have specialized niche market or differentiated services.

Among non-traditional providers, technology consulting firms

significantly grew in the past four years. It is to be noted that the financial performance of single

proprietorship and partnership companies as well as research and consulting centers in academic institutions is not included in the analysis due to lack of information available.

Table 32. Financial Performance of leading Business and Management Consulting Service Firms in the Philippines based on SEC listing of Top 12000 Corporations (values in thousands of pesos),1996-1999

Company

Rank Gross Revenues Growth Rate

Gross Revenues

Growth Rate

Gross Revenues

Growth

Rate

Ave Growt

h Rate

1996 1997 1998 1999 1996 1997 1996-97 1998 1997-98 1999 1998-99

1996-99

Firms whose main activity is management consulting

Andersen Consulting/ Accenture

683 500 328 342 808,079 959,568 18.75 1,471,686 53.37 1,414,211 -3.91 22.74

Iberpacific 6807 3807 3171 2684 25,066 75,441 200.97 98,377 30.40 121,602 23.61 84.99

Consultancy by Technicus Corp

- 5811 1921 2694 NA 40,490 - 193,523 377.95 120,734 -37.61 170.17

IMS Philippines - 5496 3631 2991 NA 44442 - 82,505 85.65 103,652 25.63 55.64

Watson Wyatt Phils

5192 5205 3984 3065 NA 48,059 - 72,691 51.25 100,236 37.89 44.57

John Clements Consultants

3961 4062 4392 3907 58,434 69,090 18.24 63,484 -8.11 72,695 14.51 8.21

Orient Integrated Devt Consultants

5080 5009 5303 - 40,014 50,940 27.31 48,143 -5.49 NA - 10.91

Motivation Asia Phils

5415 10846 5856 - 36,625 13,866 -62.14 39,203 182.73 NA - 60.29

Urban Integrated Consultants

7825 8272 6900 - 19,713 22,925 16.29 28,393 23.85 NA - 20.07

Lazaro, Bernardo, Tui and Associates

- - 7258 - NA 0 - 25,284 - NA - -

Guthrie Jensen Consultants

7144 7123 7259 - 23,222 29,567 27.32 25,284 -14.49 NA - 6.42

Cest Inc 8219 8254 7398 - 18,114 22,995 26.95 24,415 6.18 NA - 16.56

EDS Intl Phils - 8452 7539 - NA 22,097 - 23,468 6.20 NA - 6.20

Neville Clarke Phils

8662 8722 7735 - 16,452 20,922 27.17 22,305 6.61 NA - 16.89

GCV Mgmt and Consulting

- - 7882 - NA 2,565 - 21,508 738.52 NA - 738.52

Hambrecht and Quis Phils

- 7686 8113 - NA 26,036 - 20,290 -22.07 NA - -22.07

Madecor Career Systems

8637 9890 8905 - 16,565 16,514 -0.31 16,513 -0.01 NA - -0.16

Economic Development Foundation

- - 9249 - NA 14,506 - 15,254 5.16 NA - 5.16

KPMG Consulting - - 10066 - NA 4,609 - 12,703 175.61 NA - 175.61

IDP Consult Inc - - 10082 - NA - - 12,652 - NA - -

Enterprise Devt Group Asia

- 10328 10417 - 11,615 15,203 30.89 11,787 -22.47 NA - 4.21

62

Company

Rank Gross Revenues Growth Rate

Gross Revenues

Growth Rate

Gross Revenues

Growth

Rate

Ave Growt

h Rate

1996 1997 1998 1999 1996 1997 1996-97 1998 1997-98 1999 1998-99

1996-99

Pac/Ancilla

ENR Consultants - - 10457 - NA 6,123 - 11,671 90.61 NA - 90.61

Manila Execon Group

9670 9905 10703 - 13,463 16,474 22.37 11,054 -32.90 NA - -5.27

Capital Strategies Phils

- - 11639 - NA 5,400 - 9,260 71.48 NA - 71.48

Pricewaterhouse coopers

- - 11902 - NA - - 8,861 - NA - -

Louis Berger Intl Inc

7328 5431 - - 22,216 45,257 103.71 NA - NA - 103.71

ProSearch 8304 7018 - - 17,828 30,173 69.25 27,074 -10.27 NA - 29.49

Pinkerton Consulting Services

7517 7021 - - 21,140 30,159 42.66 NA - NA - 42.66

SGV-Development Dimensions

8103 7945 - - 18,581 24,552 32.13 NA - NA - 32.13

Control Risks Phils

9404 8979 - - 14,174 19,906 40.44 NA - NA - 40.44

Escaler & Co inc - 10134 - - 7,666 15,753 105.49 NA - NA - 105.49

Madecor Env Mgmt

9384 10753 - - 14,239 14,080 -1.12 NA - NA - -1.12

Corporate Discretionary Services

- 11007 - - NA 13,505 - NA - NA - -

Isis Research Ltd - 11953 - - 7,129 11,465 60.82 NA - NA - 60.82

DL Lazaro Inc - 9956 - - 4,701 16,323 247.22 NA - NA - 247.22

Subtotal 1,215,036 1,749,005 43.95 2,397,388 37.07 1,933,130 -19.37 20.55

Non-traditional providers of management consulting services whose main activity is other than management consulting

Market Research

AC Nielsen Dealer Msmst Svcs (Dealer Pulse)

2557 2429 2031 1837 111,185 140,023 25.94 182,493 30.33 210,560 15.38 23.88

AC Nielsen Consumer Res Svcs (Consumer Pulse)

3268 3049 2972 2859 78,819 102,570 30.13 109,106 6.37 110,016 0.83 12.45

AC Nielsen Unisearch Res Svcs

- - 2930 2624 NA 75,593 - 110,706 46.45 125,295 13.18 29.81

AC Nielsen Media Measurment Svcs (Media Pulse)

6826 7215 6053 - 24,958 28,812 15.44 36,870 27.97 NA - 29.43

FS & Associates Phils

- 4709 - - 27,338 55,602 103.39 NA - NA - 103.39

Taylor Nelson Sofres Phils (Frank Small and Associates)

- - - 3655 NA NA - NA - 78,955 - -

ResearchPhils-Unisearch Inc

3923 3801 - - 59,418 75,593 27.22 NA - NA - 27.22

Trends-MBL 2672 2712 2623 2467 104,386 121,224 16.13 131,115 8.16 137,606 4.95 9.75

PSRC-Research International

- - 3767 4202 NA 59,787 - 78,589 31.45 66,039 -15.97 7.74

Asia Research Organization

6958 9456 - - 24,249 18,031 -25.64 NA - NA - -25.64

Market Research International Phils

- - 10727 - NA 0 - 10,997 - NA - -

Subtotal 430,353 677,235 57.37 659,876 -2.56 728,471 10.40 21.73

Technology Consulting

63

Company

Rank Gross Revenues Growth Rate

Gross Revenues

Growth Rate

Gross Revenues

Growth

Rate

Ave Growt

h Rate

1996 1997 1998 1999 1996 1997 1996-97 1998 1997-98 1999 1998-99

1996-99

Asian Computer Group

10878 11451 9760 - 10,594 12,501 18.00 13,636 9.08 NA - 22.54

Ayala Systems Technology, inc

1789 2088 1038 1143 180,911 174,049 -3.79 443,061 154.56 378,630 -14.54 45.41

Code Red Consultancy

5611 6187 - - 34,643 36,945 6.64 NA - NA - 6.64

Corporate Information Solutions

2686 2063 1302 1176 103,709 177,364 71.02 337,544 90.31 366,222 8.50 56.61

IEWorks Inc 10097 11952 9891 - 12,356 11,466 -7.20 13,182 14.97 NA - 0.28

Intercommerce Network Services

- - 7636 - NA 13,478 - 22,875 69.72 NA - 69.72

James Martin & Co. Phils (Headstrong)

- - 2498 1618 NA 101,473 - 140,469 38.43 245,086 74.48 56.45

Key Consultants - - 10528 - NA 8,432 - 11,447 35.76 NA - 35.76

Misnet 5820 3374 1720 1390 32,607 89,183 173.51 226,173 153.61 298,890 32.15 119.76

Sykes Asia - - 4680 1573 NA - - 57,546 - 253,052 339.74 339.74

WeServSystems International

- 1425 1499 1074 NA 287,653 - 269,586 -6.28 407,275 51.07 22.40

Subtotal 374,820 912,544 143.46 1,535,519 68.27 1,949,155 26.94 79.56

Construction/Engineering Consulting Asian Technicon Mgrs & Cons

8118 7241 7681 - 18,504 28,571 54.40 22,618 -20.84 NA - 43.99

Cedco - 7955 - - 5,280 24,503 364.07 NA - NA - 364.07

Constech Mgmt Group

10988 10913 - - 10,398 13,745 32.19 NA - NA - 32.19

ProConsult Inc 8013 7225 7565 - 18,967 28,713 51.38 23,316 -18.80 NA - 41.99

SP Castro and Associates

- - 10613 - NA 687 - 3,574 420.23 NA - 420.23

Rider Hunt Liacor - 9561 - - 15,914 17,640 10.85 NA - NA - 10.85

Schema Konsult Inc

6867 3095 3796 - 75,239 100,516 33.60 77,772 -22.63 NA - 22.28

Planning Resources and Operations Systems

6067 4341 6316 - 30,546 62,587 104.89 34,007 -45.66 NA - 82.06

RN Ferrer & Associates

5693 6170 4761 - 33,843 37,130 9.71 55,854 50.43 NA - 34.93

Pacific Orient Consultants & Mgmt

- 10098 11078 - 6,793 15,877 133.73 10,241 -35.50 NA - 115.98

Subtotal 215,484 329,969 53.13 227,382 -31.09 NA - 37.58

Business Intelligence Units

PMI Asia - - 11093 - - - 10,213 - -

Investment/Financing Companies Walden AB Ayala Management

- - 8887 - - 14,981 16,579 - 10.67

Learning Institutions/Non-Government Organization

Center for Empowerment and Resources

- - 10320 - - 10,406 - 12,054 15.84 - 15.84

Center for Leadership and

- 7584 7931 - - 26,556 - 21,249 -19.98 - -19.98

64

Company

Rank Gross Revenues Growth Rate

Gross Revenues

Growth Rate

Gross Revenues

Growth

Rate

Ave Growt

h Rate

1996 1997 1998 1999 1996 1997 1996-97 1998 1997-98 1999 1998-99

1996-99

Change

Subtotal 36,962 33,303 -9.90 -9.90

Source: Philippines Top 7000 and Next 5000 Corporations, SEC, 1997-2000 editions Note: 1999 includes only the Top 5000 since the Next 5000 is not yet available Substitute Services

The increase in use of information technology among clients, give rise to the growth of the information technology consultancy. The growth of this subsector presents both opportunities and threats for management consulting firms. Some firms are able to integrate and expand their services to include information technology. This was easy for those with affiliations with global management consulting companies which are also moving towards this direction. As seen in the Top 12000 corporations, there are more companies which have services related to information technology that are among the leading companies as compared to those in financial , human resource, marketing or development studies. However, for some companies who are not able to integrate IT into their services would mean a cut in the market share of the pie when new IT services substitute management consulting services. This is specifically applicable if the consulting company is targeting the private business sector, particularly medium and large corporations. An example of this is the possible growth of the e-business consulting industry. E-business, according to IBM is defined as “enhancing business processes using internet technologies. It encompasses not only e-commerce – the selling of goods and services over the internet – but all the business processes that can be enhanced, streamlined, and (where companies) can put in more value”. Internet technologies include not only the internet but also transactions over electronic data interchange (EDI). And a discussion of business processes and enhancing them is among the services provided by the management consulting services sector.

New Entrants

The barriers to entry in the management consulting

subsector is low because of low capitalization required. Ownership of land and equipment is not a prerequisite in the business. Being a knowledge-based industry, what matters in the entry into the

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industry is the presence of consultants who are specialized in their fields and have made significant investments in education and experience. However, some players in the industry perceive that this low entry barrier may also lead to a perceived poor public image of consultants and consulting companies compared with that of other professional service industries since anyone can be a consultant.

The entry and strengthening of position of the Big Five and

other global management consulting companies in the country and the Asia-pacific region through local firms, pose a stiff competition in the management consulting services sector. Especially, in the Philippines where there is colonial mentality. Many clients would prefer to deal with foreign and known management consultants even if similar quality of services can be delivered. This reduces the competitive advantage of existing local firms which have no foreign affiliation, plus the fact that these foreign firms bring with them greater speed to provide services needed with e-business capability and seasoned battery of young, energetic and enthusiastic consultants. On top of this, these consultants have industry-specific-knowledge-base which makes it highly differentiated, attuned to new territory, new language, new social culture, new currency and new laws. They have had the experience of global expansion in other countries and regions as well. But according to one of the major players in the industry, the competitive advantage of Filipino consulting firms and Filipino consultants lie on the pricing of consultants’ fee.

In addition to the mentioned scenario of more global

management consulting firms entering the market , the direction of the higher education institutions to improve growth of research centers and extension centers in various colleges and universities results to possible entry of more individual consultants and consulting institutions. The consulting institutions may come in the form of research and extension units that pose a possible threat to management consulting firms especially in the pursuit of grants from international funding institutions and the government as well as a part of the private sector.

2. Forward linkage/Market

Opportunities for management consulting services arise from three major sources. These are (1) international funding institutions consisting of multilateral institutions like Asian Development Bank (ADB), World Bank (WB), United Nations Development Project (UNDP) as well as bilateral institutions like

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CIDA, JBIC, AusAID, and USAID; (2) Government agencies in the Philippines; and (3) Private firms both local and foreign.

International funding institutions include governments of

industrialized countries that provide developmental assistance in the form of soft loans/grants to developing countries. Consulting services are usually multi-disciplinary in nature. Management consulting firms are able to get grants through submission of proposals and/or bids to these funding institutions. Table 31 presents the list of funding institutions and loans/grants provided to the Philippines based on the ODA pipeline of NEDA. A detailed profile of the nature of projects related to the development assistance is shown in Appendix C. It can be observed that many of the areas where management consultants are needed are related to environmental management, sustainable development and institutional development in local government units, government agency and communities. There are a few projects related to entrepreneurship and industry development while there are also some that are related to policy development.

Table 33. International funding institutions providing loans and grants to the Philippines, 1997-2000

1997 1998 1999 2000 Funding

Institution Amount # of

projects Amount # of

projects

Amount # of project

s

Amount # of project

s Asian Development Bank

172.91 12 395.7 10 125 2 192.92 9

Australia Aid 23 1 66.04 1 NA 3 Austria 17.4 1 120 1 164.85 4 Belgium 26.96 2 10.04 1 10.04 1 British 76.16 1 76.16 1 Czechoslovakia 210 2 10 1 CIDA (Canada) 16.08 3 56.9 6 European Community

16.05 2 14.15 1 23.3 1

Finland 1.46 2 France 21.96 5 10.85 1 10.85 1 FRG-GTZ (France)

18.57 12 9.62 5 7.84 1

FRG-KFW (France)

38.36 4 12.01 2 35.7 2 154.01 4

Italy 109 1 123 1 Japan-JBIC 706.77 10

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1997 1998 1999 2000 Funding

Institution Amount # of

projects Amount # of

projects

Amount # of project

s

Amount # of project

s Japan-JBIC-SYLP

85 1

Japan- OECF 1051.17

13 1054.27

13 1318.7 13

Japan-SAPROF 47.92 2 JICA (Japan) 37.5 5 51.74 5 15.88 6 16.36 2 Korea-EDCF 26.04 1 26.04 1 NA 1 KOICA (Korea) 0.96 1 0.96 1 Kuwait 33.2 1 33.2 1 New Zealand NA 4 OPEC 10 1 10 1 Spain 111.57 7 5.65 8 142.34 4 162.96 5 Switzerland 5.4 1 5.04 1 UN System -UNDP

12.94 18 18.3 16 0.52 4 1.38 4

UN System -UNDP (GEF)

1.55 3 0.37 2 1.17 5 0.37 2

USAID 19.3 1 World Bank 357 6 90 2 197 3 94 2

TOTAL

2,080.22

102

1,862.0

3

71

2,460.4

0

58

1,726.8

1

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Source: NEDA, ODA Pipeline, 1997-2000 There are also 128 locally-based donor and funding

institutions in the Philippines (which also includes some of those listed in Table 33 like World Bank and ADB). These funding institutions also have a need for management consultants especially in certain research-based and technical assistance projects. The nature of these 128 funding institutions is shown in Table 34. Those funding institutions which may not require consultancy assistance since they are either scholarship institutions or libraries or donors of school/hospital buildings are not anymore included in the table.

Table 34. Areas for funding of 128 local and international funding Institutions

Areas for funding Frequency Percentage Sustainable Development and environment 63 49.22 Micro-Credit/Micro-Finance 53 41.41

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Areas for funding Frequency Percentage Health and Nutrition 60 46.88 Livelihood and Enterprise Development 51 39.84 Gender Development/Women Development 50 39.06 Agriculture, Agrarian Reform and Rural Development

50 39.06

Cooperative Development 43 33.59 Educational Training and Resource Development 36 28.13 Science and Technology 26 20.31 Local Governance, Institutional and Policy Development

22 17.19

Student and Volunteer Formation 14 10.94 Arts and Culture Heritage 13 10.16 Urban Development and Housing 13 10.16 Peace and Human Rights 12 9.38 Disaster Response 12 9.38 Indigeneous People’s Development 11 8.59 Population and Development 8 6.25 Community and Social Development 8 6.25 Children/Youth Development 6 4.69 Philanthrophy and NGO Development 5 3.91 Early Childhood Education training 3 2.34 Education Infrastructure, Energy and Transport Communication

3 2.34

Prevention of Child Abuse 3 2.34 Fair trade advocacy 3 2.34 Mass Media, Visual Arts and Performing Arts 2 1.56 Economic Policy reform 2 1.56 Private Sector Development 1 0.78 Labor and Employment 1 0.78 International relations 1 0.78 Energy 1 0.78 Industry and Non-fuel minerals 1 0.78 Social Infrastructure 1 0.78

Source: Association of Foundations Phils., Inc., “Donor Trends: A Resource Book of Development Assistance in the Philippines” Note: Frequency may not add up to total since a number of funding institutions have more than one area for funding

Government sector consists of various departments and

agencies of the National Government that need consulting assistance. The guidelines are mandated by the Policies and Guidelines issued by the National Economic and Development Authority (NEDA). Government agencies hire consultants or acquire the services of consulting firms either in line with the implementation of projects granted them or implementation of projects that are included in the national budget. Appendix C gives a detailed profile of government agencies implementing ODA

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pipeline projects. Leading government agencies with development assistance include DPWH, DENR and DOH. Based on the profile of the clients listed by some of the management consulting firms, it was also observed that government agencies have been hiring consultants or consulting firms to assist them in the areas of training and computerization

Private agencies consists of private firms and non-

government organizations in need of specialized expertise related to internal restructuring, search for growth opportunities, staff and training development, and strategy formulation, among others. Based on the listing of management consulting firms, companies that usually hire consultants or consulting firms are large, many are multinational corporations and in growth industries of Telecommunications, Electronics manufacturing and Semiconductor assembly, Retail industry, Consumer products manufacturing and marketing, Banking, and Insurance.

Table 35 shows that in 1994, 40 industries share 90% of

the total output of business and management consulting and market research services. The primary markets which comprise 50% of the total output include Construction, Wholesale and Retail Trade, Banking, and Investment, Financing, and other non-banking services excluding pawnshops.

The other leading markets include the government (public

administration and defense) which comprise 5.86% of the output, private education enterprises (2.12), other social and community related services (1.77), and public education services (1.76).

The business, management consultancy and market

research services account for 1.64% of the output. These includes projects where firms where able to render subcontracted services to other firms within the sector.

An analysis of the market linkage indicates a wide array of

businesses where business management, consultancy and market research activities was able to render services to. Businesses range from manufacturing to services sector.

Table 35. Market Linkage of Business and Management Consulting and Market Research Services in the Philippines

Market Linkage Value (P’000) % Share Construction 2,998,372 27.10 Wholesale & retail trade 1,411,508 12.76 Banking 852,794 7.71 Investment, financing & other non-banking services exc. pawnshops 794,424 7.18

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Market Linkage Value (P’000) % Share Public administration and defense 648,455 5.86 Private education services 234,460 2.12 Other social and related community services 195,660 1.77 Public education services 194,300 1.76 Business mgt & consultancy and market research services 181,240 1.64 Mfr of parts and supplies for radio, TV & communication (semi-conductors)

162,759 1.47

Agricultural services 148,771 1.34 Real estate development 144,442 1.31 Engineering,architectural & technical services 138,496 1.25 Mfr of radio and TV receiving sets, sound recording & reproducing eq. incl records and tapes

126,761 1.15

Mfr of communication and detection equipment 125,012 1.13 Gold and silver mining 120,245 1.09 Copper mining 113,696 1.03 Petroleum refineries 109,285 0.99 Life insurance 108,031 0.98 Mfr of plastic furniture,plastic footwear & other fabricated plastic products

103,010 0.93

Banana 99,113 0.90 Bookkeeping, acctg., and auditing services 86,993 0.79 Softdrinks & carbonated water 86,085 0.78 Textile, spinning, weaving, texturizing and finishing 75,326 0.68 Mfr of appliances and housewares 74,204 0.67 Non-life and other insurance activities 66,392 0.60 Mfr, assembly of motorcycles & bicycles 65,090 0.59 Telegraph service 56,133 0.51 Telephone 53,487 0.48 Custom tailoring & dressmaking shops 50,168 0.45 Mfr of drugs and medicines 47,284 0.43 Interisland shipping including inland water 46,598 0.42 Mfr and repair of wooden furniture incl upholstery 44,914 0.41 Shipyards and boatyards 44,243 0.40 Mfr of primary cells and batteries and electric accumulators 42,225 0.38 Mfr of perfumes, cosmetics & other toilet preparations 40,527 0.37 Letting, operating real estate, residential or non-residential,other real estate activities

39,878 0.36

Sugar milling and refining 38,489 0.35 Others 1,095,002 9.90 TOTAL 11,063,872 100.00 Source: 1994 Input-Output Table, National Statistics Office

The selection of consultants by the different institutions

may vary. Some would require a bidding process to be conducted, others may require proposals to be submitted, and some may ask for presentations to be made, while some would have personal preferences to guide them in their decision. But whatever is the selection process, criteria for the selection is almost the same. Clients look for (1) track record; (2) capability/ expertise; (3)

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reputation; (4) price; and (5) relationship/s established with the client.

Track record is based on the nature and scope of projects

conducted, type of institutions dealt with and years of experience of the consultants and the consulting firms. Firms are often trapped in a vicious cycle: “without experience, they cannot qualify for assignments; and without assignments, they cannot gain experience” (Baum and Kirmani, 1991). This is the dilemma of most small and medium-sized consulting companies in the Philippines. Capability/expertise is based on the fields of specialization and areas of discipline that the company and consultants are known for. Reputation refers to the respect and image that the company and consultants possess in the industry. Pricing is a factor that may be influenced by the reputation of the consultants and/or the consulting firm. There are no set fees for consultancy services. Since the services are mostly based on the clients; needs, they are priced on a case to case basis, and are most often negotiable. Some of the major factors considered in pricing are (1) scope and nature of project; (2) consultants’ fees; (3) client (developing long term relationship, prospects for future opportunities, size of company; familiarity with the company culture; payment practices).

In the Philippines, aside from track record, reputation,

expertise, and price, relationships play an important role in the business. This was confirmed in all the interviews made with different consultants from various companies. Many of the firms, especially the small and medium-sized management consulting firms rely on personal networks to get accounts and clients. Client companies are said to be more confident in getting consultants that they personally know or those that their managers know very well. Relationship marketing is used to develop long-term relationships with clients. Even the costing of fees is based on existing relationship or potential relationship with client companies. Since relationships, play an important role in the business, changes in management or leadership in major client companies of a business and management consulting firm may also affect the potential of getting more projects/accounts from the client company in the future. But for large management consulting firms, since they have been able to establish a name and reputation for the company, relationships still matter but the ability to gain clients is dealt with more ease using other marketing strategies.

Philippine management consulting firms are mostly catering

to a number of institutions across different industry sectors. But there are also some management consulting firms that specialize in

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particular sectors such as agriculture or tourism or the public sector. The client firms and institutions are also usually medium and large in size. Small firms rarely hire consultants since hiring consultants is seen as an expensive venture. There are a number of management consulting firms who also have preferences on customers they are most likely to deal with depending on their image and reputation as well as capability. Those firms with impressive track records and capability prefer to deal with funding institutions for large projects. Limits are usually set on the amount of project they will most likely bid for. As for private institutions, preference is for large institutions and multinational corporations. There are also a number of companies interviewed who try to avoid getting projects from the government because of problems and delays in the release of payment . Smaller management consulting firms are not very selective of their clients and the projects they handle. Their objective is to build a track record and reputation for bigger projects in the future.

Going back to the premise that consulting is an idea-driven profession, the consultants remain as unique as the clients they serve, and they underscore the myriad of conflicting personalities, management styles, and conflicting visions. With this, consulting business is continuously viewed as completely differentiated catering to clients with unique requirements, putting them on a position of greater influence over their clients.

3. Backward Linkage/Suppliers

Based on Table 36, bulk of the resources provided to the business and management consulting and market research services in the Philippines are those that belong to the service industry. This coincides with the NSO figures where it was shown that bulk of the costs incurred by firms in the business and management consulting sector are those related to non-industrial services such as land and building rental.

Table 36. Supply Linkage of Business and Management Consulting and Market Research Services in the Philippines

Supply Linkage Value (P’000) % Share Radio and TV programming 1,562,075 46.55 Restaurants, cafes & other eating and drinking places

188,727 5.62

Business mgt & consultancy and market research services

181,240 5.40

Letting, operating real estate, residential or non-residential,other real estate activities

148,868 4.44

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Supply Linkage Value (P’000) % Share Telephone 89,557 2.67 Busline operators 89,197 2.66 Mfr of stationers', artists' and office supplies 87,730 2.61 Electricity 75,847 2.26 Mfr of articles of paper and paperboard 71,873 2.14 Road freight transport & supporting services to land transport

70,298 2.10

Other lodging places 69,999 2.09 Other business services, n.e.c. 68,673 2.05 Air transport 58,226 1.74 Hotels and motels 52,263 1.56 Non-life and other insurance activities 51,663 1.54 Commercial & job printing & other allied industries 50,046 1.49 Detective & protective services 45,579 1.36 Jeepney and autocalesa operation, trycycle and other road transport operation

44,598 1.33

Public utility cars and taxicab operation 44,598 1.33 Machinery and equipment renting and leasing 38,653 1.15 Wholesale & retail trade 36,241 1.08 Petroleum refineries 25,355 0.76 Mfr of misc chemical products 24,348 0.73 Postal,Messengerial and other comm services, n.e.c.

21,516 0.64

Legal services 20,037 0.60 Employment/recruitment agencies 17,074 0.51 Advertising services 16,804 0.50 Construction 16,343 0.49 Mfr of other fabricated wire & cable prods exc insulated wire & cable

15,043 0.45

Water 12,869 0.38 Repair shops for motor vehicles 12,200 0.36 Investment, financing & other non-banking services exc. pawnshops

11,733 0.35

Bookkeeping, acctg., and auditing services 9,451 0.28 Other repair shops, n.e.c. 6,146 0.18 Mfr, assembly & repair of office, computing and acctg machines

5,152 0.15

Mfr of asphalt, lubricants and misc prods of petroleum and coal

5,000 0.15

Newspapers and periodicals 4,861 0.14 Banking 3,130 0.09 Telegraph service 2,060 0.06 Other social and related community services 256 0.01 Storage & warehousing 28 0.00

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Supply Linkage Value (P’000) % Share TOTAL 3,355,357 100.00 Source: 1994 Input-Output Table, National Statistics Office

Almost 50% of the resources in the industry is supplied by radio and TV programming. This may be attributed to the fact that in the 1994 data, the market research services sector is included which requires inputs through radio and TV programming. Those that also offer public relations services is also included in the sector and this is another sector that requires inputs from radio and TV programming.

Aside from the inputs specified in Table 36, knowledge-

based resources, technology-based resources, and human resources are three other important resources of management consulting firms that need to be supplied in the industry.

On knowledge-based resources, many consultants

interviewed mentioned that the industry is suffering in terms of weak database coming from the government. Uniformity of information from different sources is most wanting in the industry. Globally, the change is towards greater speed in obtaining information. An important input that was not reflected in Table 34 is the database information coming from the government. The accuracy, timeliness and reliability of the market and feasibility studies are dependent upon the availability of timely and reliable data. However, at present, there is lack of current official statistics to base decisions from. There is usually a lag in the compilation of data. Moreover, often information gathered from different sources on the same variable does not coincide. Knowledge, technology and human resource are also obtained through academic institutions. Professional schools play an important role as institutions that train most of the consultants. Many of the independent and part-time consultants are also based in academic institutions like the Asian Institute of Management, De La Salle, Ateneo de Manila, University of the Philippines, and University of Asia and the Pacific. But unlike large management consulting firms in other countries like the US and Europe where intensive recruitment is done among different professional schools of business, among MBA graduates, it is not a popular practice in the Philippines. Consultants are mostly hired based on experience and specialization not just the educational degree they have. But junior consultants who are hired in consulting firms are also usually required to have their MBA degree. This does not mean, however that the consulting profession in the Philippines is limited to those with management background or those with MBA or MS degrees. MBA programs in professional schools are becoming more diverse,

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and consulting firms are now recruiting people from other fields such as law, engineering, and information technology, Technology-based resources such as internet and business softwares are also becoming important inputs to keep consulting companies abreast with the latest trends and information.

4. Laws, Policies and Commitments under GATS

There are minimal legal barriers in the field of management consulting services sector. In the Philippines, the following are some of the legislations and administrative policies affecting the access of foreign markets in the country as well as an overview into the different commitments of different countries under GATS that affects access of the country to different foreign markets.

4.1 Philippine laws and ADB policies • Republic Act No. 8181 or the ODA Act of 1997 . Its

implementing rules and regulations, govern projects funded through the ODA. The law states that foreign consultants participating in ODA-funded projects should associate with local consultants and/or hire Filipinos in carrying out the projects. Consultants engaged in the feasibility study and design aspects of a project may not participate directly or indirectly in any subsequent phase of project implementation. The latter is a controversial provision and there are moves to amend the law.

• The Guidelines on the Procurement of Consulting Services for

Government Projects (Implementing Rules and Regulations of Executive Order No. 164). Government may only conduct direct selection/negotiation in times of emergencies or when time is of the essence, e.g., natural calamities; failure to award the contract after open competitive selection process for valid cause or causes; and take-over of rescinded or terminated consultancy contracts. These guidelines contain the selection process, consultancy costs, agreement provisions and implementation procedures. ODA-funded projects use an open and competitive procurement process.

• Government Information Systems Plan (Executive Order No.

265). This covers the framework for computerization efforts of the government. The plan would initiate changes in data management, access to information and communication within the government and to the public. The said changes will greatly affect the flow of information and access to information in the management consulting industry. As a knowledge and information-based industry, the industry would benefit in this plan as there is more access to information and markets, both foreign and local. The

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proposed and ongoing projects under the Government Information Systems Plan as shown in Appendix D would contribute much in the areas of delivery of services of management consultants to its clients because of access to important information and database as well as opportunities to expand and have access to both domestic and local markets.

• Omnibus Investment Code (Executive Order No. 226)-IPP. The government identifies priority areas of investment every year which are embodied in the Investment Priorities Plan (IPP) The goals of this IPP, among other goals are: 1. “To explore other activities/areas that can aid in increasing the

country's exports; 2. To further the growth of agricultural productivity and increase

countryside development by attracting investment focused at providing adequate industry support and infrastructure system;

3. To focus on sustainable development by supporting activities and technologies in line with the country's commitment to environmental protection; and

4. To develop industries/sectors aimed at maintaining competitive advantage”.

Government provides incentives to those who invest in the

identified priority areas. Entities who would like to avail of the same should first be registered with the Board of Investments (BOI). In the IPP 2001, the management consulting sector was not specifically mentioned to be eligible for registration with the BOI and avail of incentives from the government, however a very closely related sector, the information technology services (ITS) can avail of these incentives.

“IT Services covers projects offering services both in the domestic and international market, in the following activities are eligible for BOI registration:

a.) Software development projects that may be divided into three

categories: • Application software products refer to the development of

packaged software programs that provide solutions to problems specific to an industry or business (such as banking, manufacturing, research and development works, etc.). These also include programs that could address problems and functions across industries (such as human

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resource management, payroll system, project management and other officer related activities).

• Middleware products are computer programs that are used: a) as interface among disparate application systems (e.g., web-based applications and mainframe-based or legacy applications; or b) to develop and manage new applications that are robust, scalable and highly available.

• System Software products pertain to the development of operating system-type and software tools-type packaged programs. Included are Operating Systems and Internet browsers and search engines.

b.) IT – enabled services cover providers of services related to data encoding, digital directories, digital catalogues, legal records, financial and accounting records, hospital and medical records, engineering and design (e.g., computer-aided structural design), customer-interaction services (e.g., message handling, call centers, help desk), unified messaging services and voice over IP.

c.) Support & knowledge – based services refer to other types of IT-related professional services, including but not limited to, provision of application or systems as in application service provider or ASP, consulting services, software maintenance services, information systems planning, computer and systems audits and other similar services.

d.) Business Process Outsourcing (BPO) services form a significant part of the major business process or operating function in a business enterprise where the services are performed by another enterprise which is located remotely from it and the services are rendered regularly and continuously, mainly at the service providers’ site and are delivered electronically to the client and/or to other recipients of the services on the clients’ behalf.

Individuals, partnerships or corporations interested to engage in

Information Technology Services (ITS) not yet registered and the expansion of existing BOI-registered projects may qualify for registration under E.O. 226 and shall be eligible for incentives thereof.

All ITS projects will be considered preferred areas of

investments for the next four years starting from the effectivity of the 2000 IPP.

Since the activity is listed in the IPP, for Filipino entities (at least

60% Filipino – owned), export commitment is not required.

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For foreign entities (more than 40% foreign – owned), at least 70% of total services rendered must be exported. If pioneering, 100% of services may be rendered to the domestic market. Provided, however, that the firm complies with the requirement under the Foreign Investments Act that the paid – up capital is at least US $200,000 which will be lowered to US $100,000 if (1) the project involves advanced technology as determined by the Department of Science and Technology or (2) hires at least fifty (50) direct employees.

To be eligible for pioneer status, a project must comply with any

of the following:

1. It must utilize new or untried technology. 2. It must have substantial venture capital. 3. It will introduce a major innovation in software development. 4. The project cost should be at least P100 million.”

Another existing policy which may not directly affect all players in the management consulting sector but would particularly affect those who bid for projects in an international funding institution like the World Bank is expressed in the following terms based on the ADB Guidelines on the use of Consultants: “Section 1.04 . Consultants to be financed by the bank from its ordinary capital resources must be engaged from any of the Bank’s member countries. Consultants to be financed by the Bank from its Special Fund Resources must be engaged from any of the eligible source countries specified by the Bank from time to time.” 4.2 Commitments under GATS

The Philippines has not made any specific commitments for

the management consulting services subsector but in any case, outlined is an overview of the commitments under GATS.

There are horizontal restrictions that summarize broad

measures affecting commercial presence and investment, real estate transaction restrictions, government subsidies or taxation, and temporary movement of natural persons. In addition to these restrictions, developing countries have also established preferences for firms that offer the best terms for transfer of technology. The horizontal commitments supersede any sector-specific commitments. To assess the full extend of trade liberalization, horizontal commitments have to be examined in conjunction with the sector-specific commitments.

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• Commercial Presence and Investment Restrictions The acquisition and control of a domestic business by a foreigner may be subject to investment ceilings, restrictions as to the type of assets that may be held, local incorporation and presence requirements, and government approval. • Real Estate Transaction Restrictions Many countries restrict the purchase of real estate and the acquisition of land. Nationality restrictions and deposit requirements are relatively common. Often, these regulations are established by sub-federal levels of government and as a result tend to be extremely complicated. Rather than impose restrictions on domestic real estate regulations, the GATS rules require transparency and access to information about these rules. • Government Subsidies or Taxation To clarify issues related to domestic taxation and access to subsidies, member countries provided specific comments in their schedule on this issue. Foreigners may not be eligible for certain subsidies or may, under special circumstances, have to pay a different tax rate. For example, the United States reserves the right to impose higher taxes on a national, resident or corporation of a foreign country where a national, resident or corporation of the United States is being subject to discriminatory or extraterritorial taxes. All countries maintain sovereignty over domestic issues of taxation and subsidization. • Movement of Natural Persons Generally, the GATS does not prevent a Member from applying measures to regulate the entry of natural persons into, or their temporary stay in, its territory. The movement of natural persons is unbound under most GATS schedules. However, many Members generally committed to allowing temporary entry for measures concerning intra-corporate transferees (managers, executives and specialists), personnel engaged in the establishment of a business, and service salespersons. Permanent entry is not dealt with in the GATS and remains under the authority of local immigration authorities.

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Specific commitments made by different countries in Asia (Singapore, Hongkong, Japan, Indonesia, Korea, and China), European communities and United States of America are shown in Appendix B. It specifies commitments based on the four modes of supply namely:

Cross-border supply which is defined to cover services flows

from the territory of one member into the territory of another Member (e.g. banking or architectural services transmitted via telecommunications or mail);

Consumption abroad which refers to situations where a

service consumer or his/her property moves into another member’s territory to obtain a service (e.g. tourism, ship repair or aircraft maintenance);

Commercial presence which implies that a service supplier

of one member establishes a territorial presence, including through ownership or lease of premises, in another member’s territory to provide a service (e.g. insurance companies or hotel chains); and

Presence of natural persons which consists of persons of

one member entering the territory of another member to supply a service (e.g. accountants, doctors or teachers).

5. Market Potential/Foreign Market Demand and Competitition

5.1 Entering Foreign Markets

There is a high degree of concentration as a consequence of the volume of capital and complex and interdependent organizations needed to maintain technological advantage., exploit several products simultaneously, and to maintain economies of scale. Similar to auditing and advertising firms, for management consultancy firms, relations with customers are established on a worldwide basis, making it difficult for enterprises from developing countries to compete and gain access to world markets.

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As mentioned in section 2.3 access to foreign markets can be seen based on the four modes of supply namely cross-border supply, consumption abroad , commercial presence, and presence of natural persons. Based on interviews made, there are numerous management consulting firms in the Philippines who had in one way or another gained experience working in foreign markets. Many local business and management consulting firms were able to gain access over foreign markets through the following :

• Growth of partnerships and joint ventures with foreign consulting

groups. The partnerships and joint ventures usually bring mutual advantage. The foreign partner bring greater experience, professionalism, technically-skilled staff, and financial resources as well as opportunities for exposure in foreign markets. The local consulting firm brings familiarity with the domestic environment, physical conditions, , culture, regulations, expertise of consultants and lower costs. These can either be in the form of formal and long-term partnerships or short-term subcontracting agreements Cross border supply and presence of natural persons were made possible in instances when some specific projects or work are subcontracted with the Philippines-based firm. In the Philippines, because of availability of skilled technology professionals and competitive fees charged by consultants, some technology-related work are subcontracted by affiliated firms. These professionals either do the work in the Philippines or they are sent overseas to do the job. Consumption abroad was also made possible especially for client companies of partners based in other countries. These client companies are referred to the Philippine affiliate company whenever they would want to expand and establish office in the Philippines. There are also few Filipino management consulting firms which were able to establish their commercial presence through an overseas office (SGV and TeamAsia).

• Overseas expansion of domestic clients also enabled Filipno consultants to have access to foreign markets. This was made possible since some domestic clients trust the expertise of their consultants so they would not want to get another consultant in another country. Other reason is that Filipino consultants charge lower fees as compared to their foreign counterparts.

• Funding of institutions like ADB, World Bank, USAID, AusAid, Japan Foundation, Ford Foundation , among others also enabled some Filipino consultants to gain access through foreign markets especially for projects to be accomplished in other countries. Expertise of Filipino management consultants and some Filipino management consulting companies (PRIMEX, OIDCI, among others) is known by these institutions. As one of the developing countries in Asia, having the competencies and track record of Filipino consultants together with

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fluency in the English language, and competitive costs are among the reasons why these companies are awarded these grants.

But inspite of efforts to gain more access to foreign markets by

Philippine management consulting companies, there are still very few companies who are able to compete successfully in the foreign market. Some difficulties and limitations cited by some players in the industry in entering foreign markets are as follows • Rigid competition in the global market. There is a strong presence of

global management consulting companies in different countries across the globe and they pose very stiff competition with smaller players in the global industry. This is even made more difficult since many management consulting companies in the Philippines have not established any brand name or brand recognition in the global industry. Most of the experiences gained in foreign markets are only through subcontracted agreements with bigger players in the industry.

• Needs of market in different countries, especially in Asia, are localized. This was specifically mentioned by a consultant from a marketing consultancy firm. There is a need to thoroughly study the culture, regulations and industry in foreign markets, especially the neighboring Asian markets.

• Difficulty in promoting the company in foreign markets due to a poor image projected by the country. This brings prejudices on the competencies of the company.

• Difficulty in access to information centers and cooperation in getting information from institutions abroad, especially in areas where there is no Philippine consulate. Access to information centers is important for consultants. Even with the presence of Internet, there are certain information needed by consultants that are only available through other institutions, government or private.

• Limitations set related to access to foreign markets when partnerships are formed with foreign consulting companies. Philippine-based consulting firms affiliated with foreign partners gain access to foreign companies who are coming in and investing in the Philippines through referrals of foreign consulting partners. However, there are some restrictions in entering foreign markets, especially countries where there are established offices of the foreign partners. Although, companies with foreign partners mentioned that this is part of the agreement and the advantages outweigh the disadvantages in the partnership.

• Low fund base/financial capability to undertake full-scale marketing on an international scale or establish an office overseas. Marketing management consulting services would entail preparation of proposals for bidding purposes as well as conducting presentations and visiting different countries to establish networks . These efforts require a big budget.

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• Low fund base/financial capability to finance operations for huge projects granted by institutions where consultancy collection of fees are classified as “fees contingent on results”. Fees are paid only after specific results are achieved. This results to limitations as far as selecting only the smaller projects to bid for.

• Great disparity in the professional fee structure of Filipino consultants as compared to the foreign experts/expatriates. Some consultants report that the difference is from 50 to 100%. Although competitive pricing is deemed by some as a competitive advantage of Filipino consultants and consulting firms, others deemed it to be discriminatory especially when the Filipino and foreign consultants deliver the same kind and quality of work.

5.2 Extent of services rendered abroad

A larger number of global consultancies are now able to provide for

the international needs of clients. Many consulting firms in the Philippines have vast international experience which were either gained through the foreign partner firms or through work experiences of consultants employed from abroad. But these are usually smaller projects implemented in cooperation with other agencies.

Some of the countries where some of the Philippine management

consulting firms extended services are Indonesia, Afghanistan, Beijing, China, Malaysia, Japan, Egypt, Brunei, Singapore, United States, Singapore, Hongkong, Sweden, Bulgaria, and Mexico, among others.

These projects were usually made possible through partner agencies (from the United States, Europe, Australia) and multilateral or bilateral institutions.

In spite of availability of expertise in some of the Philippine management consulting firms, rendering of services abroad are at times not pursued due to difficulties encountered. There is lack of interest among many qualified local consulting firms to pursue overseas work due to limited chance of success compared with the high cost of developing such markets and difficulty in obtaining registration with overseas clients.

There is also a perceived absence of focused marketing approach

aimed at promoting and developing the industry’s capabilities in the international market. There is lack of financial, technical and administrative capability to compete in international markets, particularly in International competitive Bidding Projects.

Another factor that is left undeveloped is the development of strong

and long-term linkages with overseas business groups and other

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consulting firms/associations. To guide the firms in establishing linkages Appendix H presents a directory of management consulting associations in different countries. 5.3 Foreign Market demand and Competition

5.3.1 Asia and the Pacific Asia-Pacific is the region that many countries, including the US

and Europe are looking into for their expansion. The leading global management consulting firms are specifically positioning themselves in this area knowing that this region is where most of the expansion would take place and would most likely necessitate assistance from consulting firms. Demand for management consulting services is growing in the region. This is attributed to a similar growth trend in investments and the economy. Appendix D presents some of the available market studies on specific countries in the Asia-Pacific such as Thailand, China and Laos.

Demand in Thailand are more related towards finance-related

consulting services such as financial restructuring, mergers and acquisitions, debt collection and privatization of state-held transportation, communications and energy enterprises. China is a fast growing market for consultancy services. The industry only took off in 1996 and expanded from zero to over one billion dollars in revenue. Sixty-five percent of the consulting firms are foreign which captured 85% of the market. Sectors where a high demand for consulting services lie are finance, information technology/telecommunications, and health care/pharmaceuticals. It was said that management consulting that can deliver locally tailored solutions sensitive to local culture, political dynamics, and the legacy of socialist economics will be in the best position to gain market in China. The big foreign consulting firms are already present in China while others formed joint ventures with China-based consultants. There are limited market studies available in other countries, but since most of the funding institutions have allocated funds for Asian growing economies like Cambodia, Laos, Vietnam, and Sri-Lanka then it is expected that development management related consulting services are needed in these countries. The Philippines, with the presence of consultants with previous work experience in these countries is in a good position to vie for these projects. It was cited by one of the consultants that, Filipino consultants would know more of the economy, culture and management trends and even language in Europe and US but not much in its neighboring Asian countries. The proficiency in the use of the English language and some similarities in the economy and culture of its Asian neighboring countries provide opportunities for Filipino consultants in the region to set up overseas offices, form partnerships or compete for projects with funding institutions concentrated in the Asia-Pacific region. And since many of the largest consulting firms in UK and US are focusing

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on Asia, there are also opportunities to develop partnerships with these firms to become an entry point in the region.

5.3.2 Europe Western and Central & Eastern Europe are two distinct markets in

Europe. Western Europe comprises 27 to 30% of the total world market for management consulting services. The integration of the economies and culture of acceptance of the management consultants in businesses make Western Europe a big market for the services. However, there are various cultural differences and preferences in some areas for certain businesses in their selection of consultants. Appendix E presents a summary of market studies for Germany, Italy, Switzerland, United Kingdom and Bulgaria. The market and the market needs in Germany, Italy, Switzerland, and United Kingdom is very sophisticated. The market is very receptive of consultants but Philippines may have difficulty in entering the market. A possible opportunity are joint ventures, partnerships or affiliations with the large firms in these countries who have interests in expanding to the Asia-Pacific but have not been able to establish their footing in the area. Bulgaria, along with Central and Eastern Europe is moving towards a capital economy. This presents opportunities for management consulting firms which are needed in the transition of the economy. Philippines, with its capability to affiliate with foreign partners in these areas or resources to set up overseas office in these areas will present potentials for management consulting firms. Needs of the market will be concentrated more on setting up and entry strategies.

5.3.3 North America Eversince the development of management consulting services,

USA remained to be the leader in the industry in terms of revenues, innovation in the operations of consulting firms, and development of service technology. It was estimated that the region accounts for almost 40% of the world market of consulting services. The US market is very receptive to management consultants. The benefits derived from consultants and consulting firms have been proven time and again by different firms in the region. Appendix F presents the available market study about the region. Like Europe, US is an established market where competition is very rigid. Opportunities for the Philippines lie on developing joint ventures, partnerships and alliances with the larger firms in the country.

5.3.4 Others

Other regions, such as the Middle east also represent some market potential and prospects for the industry. Refer to Appendix G for available

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market studies on different countries such as Kuwait, Panama, and Argentina. In these three firms, American firms dominate the market. Managers are also mostly US-educated. This presents stiff competition areas for Philippine management consulting firms.

6 Supply Capability

6.1 Offered Services The services offered by management consulting firms in the

Philippines are not very far from those offered by management consultants abroad. There is also a trend towards integrating information technology into the services that are offered. In the Philippines, the integration of information technology is mostly seen with consulting firms with foreign affiliations. There are also other services offered apart from the strategy, finance, marketing, operations and human resource-related services. There are specialized services based on either the sector a company focuses in (e.g. tourism) or specific services like franchising, change management etc. As a developing nation, there is also a significant part of the industry which specializes in development consulting. IMPHIL, as a matter of fact, is mostly made up of development consulting firms (OIDCI, PRIMEX, Madecor, SEA Consultants, and SEARCA) and the big players in the industry which mostly started as accounting and audit firms and later affiliated with global management consulting firms (SGV with Andersen, Laya Mananghaya with KPMG, and J. Cunanan with Price Waterhouse).

Table 37. Services offered by Philippine management consulting firms

Management consulting services Specific areas of service General and strategy management services

Strategy management Business Planning Economic and Feasibility studies Country risk analyses

Human resource management Corporate reorganization Human resource development Organizational development Training Needs Analysis and Design Executive Recruitment

Marketing management Market review and strategy management Market strategy and conceptualization Corporate Communication Customer Satisfaction Checks Events Management – organizing conferences, exhibits, seminars, workshops Public relations

Production/operations management Production analyses and Optimization Total Quality management International Standards (ISO) Operations and management audit

Financial management Financial Planning and evaluation Mergers, acquisitions and investments Corporate valuation and analyses

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Management consulting services Specific areas of service Investment assistance

Technology Management Enterprise Resource Planning (ERP) Solutions Internet based technologies/Market solutions Systems Analysis and Design Management Information systems design/ Strategic Information systems Technology applications Software Package Development and evaluation EDP Training systems development

Specialized services Franchising consulting Tourism-related consulting Compensation survey Benefits and insurance Health-services related consulting Risk management consulting

Development consulting Environmental and natural resource management (forest land use, environmental management, solid waste management, impact assessment) Integrated Area Development planning (Ecozone and Industrial area development planning, Land use planning) Policy Review and Formulation Micro-enterprise development

6.2 Areas of Specialization

Consultancies’ and Consultants’ specialist knowledge remains to

be the prime attraction for clients. For management consulting firms in the Philippines, specialization is based on expertise of consultants that make up a firm (CPAs, agriculturists, engineers, economists etc.). For management consulting firms which evolved from accounting and audit firms, financial management remains to be their expertise, however, slowly they are offering services other than those related to finance. Most of them offer a wide array of services so they are considered as “full-service” firms. Finance and human resource are two major areas where most firms in the Philippines specialize. In finance, because of the number of accounting, auditing and bookkeeping firms which also offers management services, these firms were able to offer finance-related consulting. In human resource, specialization is mostly in the areas of training and organizational development. There are also some firms that specialize in particular sectors such as agriculture, tourism, hotel and restaurants, and development consulting. Refer to Table 38.

Table 38. Areas of specialization of Philippine management consulting firms

Area/s of specialization Company General and strategy management services

Innovision Strategic Development Consulting AYC Management consultants Leverage International

Human resource management Integrative learning (training) Intellectron (training) Stream Training (training) Ancilla Enterprise development Group John Clements consultants

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Area/s of specialization Company Asia Business consultants Guthrie Jensen

Marketing management TeamAsia Motivation Asia

Production/operations management Asiatech resource management Financial management Business recovery and turnaround (company turnaround)

Manabat-Deloitte Touche Tohmatsu (Finance, tax advisory) J. Cunanan-Price Waterhouse Laya-Mananghaya -KPMG C, Valdez Company Ernst & Young Alba Romeo Management Consultants DTTI Consultancy CLRV Neo-Synergy Equity Managers Incuventure Asset EM Management Consulting

Technology Management Iberpacific (ERP/e-business) Corporate Information Solutions Andersen (ERP) Workgroup connection

Specialized services Change consultants (change management) Enterprise development group (change management) GMB Franchise Developers (franchising) Solutions, Inc (benefits and insurance) Asia-Pacific Projects (tourism) Meganomics Specialists (agriculture) SEARCA (agriculture) Watson Wyatt (compensations survey)

Development consulting OIDCI PRIMEX ARMDEV Economic Development Foundation

6.3 Expertise/Technical Competence of Manpower

Only a manageable number of personnel is maintained by

management consulting firms. According to interviews made, there is a need to maintain low overhead costs, especially because of the seasonal nature of the business. Projects may not be there at specific times. Most of the small and medium-sized and a few large management consultancy firms, instead maintain a database of local and foreign consultants who can be tapped for specific projects. Only the senior managers and/or partners together with some administrative staff are maintained in the regular operations. Nevertherless, the expertise and competence required from these consultants do not differ as much.

Senior consultants and partners in small and medium-sized firms

are given privileges such as flexibility in time since many of them are also consulting professors. In larger firms, they are maintained to perform administrative and marketing functions in the firms.

No specific course or school trains consultants. They are also from different fields of study. This is the reason why most recruitment of junior

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and senior consultants is not done in schools. They are most often referred personally and are preferred if they have a significant number of years of experience and exposure. Table 39 summarizes the expectations of firms from their employees.

The academic achievement and work experience of consultants in the Philippines is vast. Many of the consultants gained their masteral and doctoral degrees abroad either through scholarship grants or through personal subsidy. Many were also exposed to international training and symposia at the expense of their firms or through individual subsidy.

Objectivity and knowledge of best practice is another reason why

consultancies are chosen to solve client problems. Majority of Filipino consultants are retired civil servants who has acquired long years of experience and expertise. The country has a large pool of managers and planners with masteral and doctoral degrees gained locally and abroad. The consultants are known for high trainability and high computer literacy. In addition, consultants also have proficiency in the use of the English language.

Table 39. Profile of Manpower Competence and Expertise of employees in Philippine Management Consulting firms

COMMON POSITION/S ROLE COMMON QUALIFICATIONS Research Assistant, Research Associate, Analyst, Business Analyst, Research Analyst, Associate Consultant, Junior Consultant

Employed to do number crunching (if area of consulting is quantitatively oriented), data collection, and/or assistance in report preparation . After a year or more, analysts are more likely to take a responsible role with problem solving and client contact

Academic achievement (graduates of BA or BS degrees) related to services offered by the firm (Human Resource, Engineering, Management, Computer) With 3 to 5 years relevant work experience Other qualities: Maturity Problem solving skills Logical reasoning Business acumen Team orientation Writing skills Presentation skills Ability to cultivate relationships Facility with computer software Quantitative and statistical skills Energy/stamina Pattern of leadership

Senior Managers, Senior Consultants, Partners

Oversee projects, deal directly with client and conduct meetings and presentations, supervise staff in the implementation of the project, makes decisions and recommendations to the client

Academic achievement (graduates of MBA or PhD degrees) related to services offered by the firm (Human Resource, Engineering, Management, Computer)

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COMMON POSITION/S ROLE COMMON QUALIFICATIONS With 10 to 40 years relevant work experience Other qualities: Can work independently Maturity Leadership Problem solving skills Logical reasoning Business acumen Team orientation Writing skills Presentation skills Ability to cultivate relationships Facility with computer software Quantitative and statistical skills Energy/stamina

The technical competence and qualities looked for by firms in the Philippines do not differ with those looked for by the global management consulting firms as shown in Table 40.

Table 40. Profile of Manpower Expertise and Human resource Development efforts in Global Management Consulting firms

Consulting Firm Human Resource development Andersen Consulting

Profile Employment increased from 21,355 in 1989 to 65,000 in 1999 Workforce is diverse and professional New graduates and MBA levels start as analysts or consultants Offers the following for employees: Recognized leader in training and invests nearly US $ 600 million annually in the professional development of their people Developed “communities” made up of 100 to 150 individuals . They are intended to provide a consistent home for employees and influence almost every aspect of an employee’s career including professional development and mentoring Introduced in US and Canada the Women’s Mentoring Program which aims to improve retention of women managers by pairing Manager-and-above proteges with Associate Partner or Partner mentor. Offers flexible work arrangements such as part-time and leaves of absence in a case-to-case basis. Request is evaluated based on the reasons for request, work performance and potential success with the firm Implemented the Andersen Consulting at Your Service” Concierges based on employee feedback that the number one barrier to doing their job more effectively was handling chores that had to be done during business day from walk the dog

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Consulting Firm Human Resource development to pick up from dry cleaning to shopping gifts. The service is offered at nominal cost to employees and Andersen Consulting picks up bulk of expense. Competencies looked for: Need people with strong ecommerce skills, understands internet technology, and potentials of eEconomy Specialization in the industry typically begins after a few years on the job Cater also to professioals with experience who have strong ecommerce skills Qualities such as being Well-rounded Strong academic Performer A lifelong earner Committed to developing a Career Interested in and understands what is done in the consulting Skilled at written and oral commu- nication Interested or skilled in ecommerce Team and results oriented

Deloitte consulting Profile New graduates join as business analysts or a systems analysts MBAs with significant work experience were also taken in as Senior Consultants which leads to Manager, Senior Manager and Partner Offers the following for employees: There is a great opportunity for rapid professional growth Competencies looked for: Focus of recruitment are in the areas of package implementation which requires expertise with PeopleSoft, Oracle and SAP. There are also tremendous needs in the Client/Server Solutions area Ability to think clearly, logically and with insight Quick mind and high level of energy Common sense and judgment Ability to secure the cooperation of others and persuade them to act Flexibility and sense of humor Desire to broaden one’s career focus beyond a specific technical or functional skill With self-confidence to work effectively with people at all management levels With initiative, drive and persistence

KPMG Consulting Profile Graduates join company as management analysts or consultants. They work closely with senior managers and managing directors

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Consulting Firm Human Resource development Employees receive an initial grant of stock options. Offers the following for employees: Flexible hours Telecommuting Employee and team performance bonuses Recognition awards Departmental outings Fitness club membership discounts Reduced rates for day care child facilities Happy hour occasions Competencies looked for: Technical skills Industry knowledge Innovative thinking Dedication to continuous learning and development of skills

Pricewater-house Coopers

Offers the following for employees: Offers training and career development programs for new graduates and MBAs Competencies looked for: Hire peole who have a proven track record at the best organizations across all industries and functions Those who have demonstrated initiative and success in their education and previous work experience Good communicators Passionate about their work Provides best service to clients Top grades Creative thinking skills Analytical skills

Ernst & Young Profile Employs 77,000 people in more than 130 countries and 689 office locations New graduates’ entry level are staff accountants, tax consultant and advisers Offers the following for employees: Offers innovative continuous learning process Support people to earn masters in accounting Competencies looked for:

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Consulting Firm Human Resource development Well rounded Strong leadership skills Strong business acumen Strong communication skills Ability to be flexible in the continuously changing e-economy Ability to work well with others High performance individuals Team-oriented

6.4 Existing Association To organize and enhance the competitiveness of the industry, the Institute of Management Consultants of the Philippines (IMPHIL) was established in 1985 as a professional association of management consultants in the Philippines. It is under the umbrella of the Confederation of Filipino Consulting Organizations (COFILCO), which represents Filipino professional consultants from eight member associations, mostly from the fields of engineering and architecture.

IMPHIL has an existing membership of 19 management consulting

firms and one (1) individual member. The members represent some of the more established management consulting firms in existence for a number of years in the Philippines.

In its charter, IMPHIL had specifically set the following objectives

for its existence:

• “Enhance and encourage the development of the art and science of management consulting to its highest standards through the provision of professional services and the organization of appropriate activities by Institute’s members;

• Work towards making the profession of management consultants recognized; respected, and accepted as providing a valuable and often indispensable service to private business and industry and to government and public services;

• Serve as forum for the exchange of information and as a center for cooperation and collaboration on matters relating to management consultancy;

• Foster and encourage professional, social, and friendly ties among the members of the Institute;

• Foster the highest standards of personal integrity and competence in the profession of management consulting,

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and towards this end, endeavor to set the requirements and standards for the exercise of the profession;

• Seek the advance of the profession of management consultancy by extending its frontiers of knowledge through involvement in study, research, and similar activities; and

• Consult, cooperate, affiliate with groups, associations, organization or institution, whether local or international, having similar or identical objectives with a view of advancing these same objectives.”

IMPHIL has made efforts to enhance the competitiveness of the

industry. Recently, it spearheaded the efforts to come up with an integrated marketing brochure for IMPHIL members which will be used to market the member firms and their services especially to foreign clients. It was also able to initially develop its own website at www.imphil.org to provide information regarding their organization. It is also active in its efforts to see the passage of the National Consulting Act which aims to help Filipino consultants. According to Mr. Viado, other endeavors that IMPHIL aims to achieve for the past years but was not able to gain grounds and be successful in it are the (1) establishment of an accreditation system in coordination with NEDA ; and (2) linkage with the Bureau of Export and Trade Promotion of the Department of Trade and Industry. Although, initial meetings were conducted between the government agencies and IMPHIL, there are a lot of areas that IMPHIL and these government sectors would still need to work on.

There were difficulties encountered by IMPHIL specifically with regards

to forming a secretariat to really focus on efforts and work on the organization’s plans. The officers of the organization have to face the demands of their own businesses and projects, there is a need to really have working group to focus on the issues confronting the industry. The costs involved in forming a secretariat is also another area of concern with only 20 members to support the said endeavor.

In a position paper by COFILCO on the development and growth of the Filipino consultants, there is no doubt about the consulting industry’s dollar earning potential. However, COFILCO stand witness that most of the major consulting contracts are not by Filipino consulting firms. Large consulting works are undertaken by foreign consultants vis-à-vis foreign assisted projects. It is not difficult to show that the local consulting firms are actually subsidiaries of international consulting firms operating through majority owned Filipino corporations. Under these conditions, the Filipino consultants are not the prime and lead consultants in his own country. The unfortunate result is that the Filipino consultant could not develop into a world-class consultant that can penetrate the international market.

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The COFILCO recognizes that the present state is already at an alarming stage of deterioration and stagnation that may stunt permanently the growth of the Filipino consultants. COFILCO has identified CIAP as the government agency that can support consultants to address the problem of the local consultants.

7. Industry Training Needs

7.1 Quality and Quantity of Training

As seen in Table 38, the global management consulting firms to manage growth, and maintain staff and quality of service, place emphasis on development of its people. Support is given to those who pursue further studies, and offers training and development programs for a continuous learning process to take place. Consultants, due to the nature of their work are people who would have a high need for a learning environment. But minimization of stress and strain in the workplace is also done like offering concierge services, part-time work options, sabbaticals, and restricting travel to weekdays.

For management consulting firms in the Philippines, a recent

survey made point out to the following practices of firms in the training and development of its employees: • Firms develop their senior consultants, managers from within the

company rather than hiring from outside • Firms provide job-specific training and training on integrative skills to

their managers on the job • Training and development of technical staff or junior consultants are

usually done either through in-house training or by hiring other private training firms.

• Training given to junior consultants are usually in the form of group planning activities, on-the-job meetings, decision-making courses, and system analysis

• Development of both junior and senior consultants are also made possible through the use of e-groups through which relevant articles are distributed to employees

• A few firms have very stiff training and development program for their consultants which were carefully planned and implemented

7.2 Identification/Listing of Training Needs

Representatives from different management consulting firms all

agree that training and development of human resources (consultants) is a prerequisite to enhance the competitiveness of Philippine management consulting firms. Consulting is a knowledge/idea game and the human resource development requirement is quintessential. Filipinos are very

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adaptable professionals, culturally, they can co-exist with different cultures, and learn different languages fast. To add to that is the fluency in the use of the English language. There is therefore only the basic needs for further education and exposure that is needed by Filipino consultants. Below are some of the training needs mentioned that would assist in this pursuit.

Education and exposure abroad. Support through government assistance or availment of necessary information on private scholarship grants that can be availed by management consultants for further exposure on new management tools and services. Multilateral agreements can also be made in sending management consultants for education and exposure abroad. In doing this, the industry can be assured of growth and would necessarily result to a corresponding multiplier effect on the different clients and businesses that the management consultant would deal with. Trends worldwide and needs of private sector, public sector and multilateral institutions are mostly geared towards a need for specialists in various fields of discipline. This can only be done through assistance in the training of specialists. Training on the use of information technology. Some management consulting firms also expressed the need for training on maximizing the use of information technology such as the internet to get information and updates, use of database softwares for clients and other data , as well as softwares that could enhance in the packaging and presentation of services to clients. This was also seen as a need especially for senior consultants who need to get updated in recent trends in technology. Companies with international and foreign affiliations have very good training and infrastructure related to information technology. However, management consulting firms without these infrastructure should be able to upgrade themselves as well to keep abreast with their competitors. Philippine software associations can provide valuable input on how management consulting firms can develop and integrate information technology into their operations and services. Training on international market development. The numerous small and medium sized management consulting firms have ahd not much experience in the international market. To develop their capabilities, the more experienced players in the industry can share some of the things that the small and medium sized players would need to know to develop international market.

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8. Opportunities and Threats

8.1 Opportunities

8.1.1 Socio-cultural

Asia-Pacific is a growth region where the market for consulting industry is seen by many, including the major global management consulting players from US Europe, to possess a high potential because of its developing economies. The Filipino consultants’ characteristics of having a combination of a strong background and exposure on western education and management as well as familiarity with some neighboring Asian countries’ culture obtained through exposure in these countries in previous work experiences pose an opportunity for partnerships with global consulting firms in their plans (for those who still have not set-up office) to expand in the Asia-Pacific. The Filipino characteristic of being able to build good interpersonal relations, value for higher education, proficiency in the use of the English language and ability to learn fast are also important factors that can contribute to increasing opportunities for success of Filipino consultants and consulting firms.

8.1.2 Technological

Technological changes related to information technology results

to development of new services and new sources of revenue for management consulting firms. Recent trends show the interrelationship between management consulting and information technology. The Philippines, therefore, being one of the leading countries in Asia, together with India, is among the most promising source of human resources and software technology . This present opportunities for the management consulting services sector to take advantage of these available resources to strengthen their capabilities.

8.1.3 Economic

The Philippines is on a stage towards development. It has learned from it past economic experiences and these experiences are the ones that can be used to present opportunities for consulting in the developing economies like Vietnam, Cambodia, Eastern and Central Europe. Filipino consultants charge relatively lower fees as compared to their foreign counterparts. This is seen by some as a competitive advantage especially in the submission of bid proposals.

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8.1.4 Political-legal

As one of the developing countries in Asia, the Asian Development Bank and other bilateral and multilateral institutions provide opportunities for local management consulting firms through grants provided. It is however, limited to those with the necessary skill, expertise, track record and reputation to be accredited and be included in the shortlist.

Government , particularly in the areas of public administration, rural

development, education, community, social, and health services present opportunities for the consulting industry.

Privatization efforts in different countries in Asia like in Thailand

lead to a need for consulting groups to assist the public sector in its transition.

8.2 Threats

8.2.1 Socio-cultural

Foreign and Brand mentality of clients who prefer foreign and known consultants over local consultants. Colonial mentality of clients is a threat for Filipino consulting firms especially wit h the entry of more foreign firms who form joint ventures with existing accounting and management consulting firms. There is difficulty in marketing management consulting to foreign markets since there is a perceived poor image of Filipinos abroad as cited by consultants who had previous experiences in marketing services abroad.

Very few small firms seek the assistance of consultants because of the perception that consulting is expensive. The market therefore is limited to large enterprises.

8.2.2 Technological

Technological changes bring about growth of information technology consultancy firms which also eats up a share in the market of management consulting firms.

Many Filipino firms are in a dilemma of “without experience, they cannot qualify for assignments; and without assignments, they cannot gain experience”. There is inability to develop services and track record of consultants if there are no opportunities given.

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8.2.3 Economic The economic crisis leads to cost cutting in many companies, including costs related to consultancy services.

8.2.4 Political-legal

In spite of availability of government projects, many consulting companies try to avoid getting projects from the government due to difficulties in collecting payments. In other instances, there is also difficulty in getting government projects because of the stiff competition and at times preference over foreign consultants.

There is a weak national database on management consulting

industry to be able to assist in the monitoring industry performance, accessing information on market opportunities, and making decisions based on reliable and updated information.

9 Summary of issues confronting the Management Consulting industry

The Philippine marketplace is expanding from domestic to global horizons and its economic base is changing increasingly from resources to knowledge.

The Philippine objective is to foster the competitiveness of the

management consulting industry through the client-focused delivery of innovative products, services, and policies. But before specific recommendations are made, this part of the paper summarizes the issues that confront the industry based on the information gathered as presented in the previous sections of this paper. These issues will form as bases, along with the strengths and weaknesses of companies in the industry as shown in Appendix I and the opportunities and threats in the industry as discussed in section 6.

Issue 1: There is an absence of reliable data base to properly monitor the performance of the industry, the real contribution to the economy and the number of players in the industry. A reliable database is necessary to properly monitor performance and identify the key areas that would establish significant development of the industry.

The small size of the industry as compared to other business service sectors lend itself to be included in “other business services” in the definition of PSIC. The definition of the PSIC is another point of contention since it includes activities of management holding companies therefore making estimates on the performance of the industry unreliable. To add to this is the very nature of the industry of being diverse. There is a very thin line that draws the difference between traditional and non-traditional providers of

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management consulting services. There is therefore a need to also include the specific management consulting services’ contribution in the business of the non-traditional providers since these may have a significant effect on the estimation of size of the market for management consulting services. Another point to be considered is the existence of small players and individual consultants in the industry. There is more difficulty in monitoring these individual consultants and small players who may come and go because of low entry and exit barriers in the industry.

Issue 2: There is a very competitive environment in the management consulting industry. The competition in the industry is characterized by the following (1) existence of large international multifunctional firms with the capability of offering full-service packages and who have a significant share in the market; (2) increasing number of non-traditional providers of management consulting services; (3) low entry and exit barriers in the industry leading to more players in the industry and poor image of consultants since anyone can just be a consultant; (4) high supply of consultants and consulting firms and low demand for the services in both private and public sector markets. There are recent news indicating a decrease in official development assistance from other countries. For private sector market, it is concentrated on large firms and even large firms have limited demand for consulting services especially if they have internal consultants (corporate planning department); (5) existence of few players with highly differentiated services. Unlike technology consulting or market research firms who were able to offer differentiated services through branded solutions or packages, few consulting firms were able to successfully do so. Switching costs are therefore very low.

Large, new players and non-traditional providers of management consulting services have added significant competitive pressures to the local market . With the blurring of the consulting industry’s boundaries, non-traditional suppliers are adding to the supply of consulting services available to the market. In addition, there is a growth in advisory services offered by public and non-profit organizations such as colleges, universities and non-government organizations. The competition these entities offer can affect management consulting firms of all sizes. Issue 3: Absence of a legal framework and specific government support to assist in the implementation of accreditation of consultants so as to upgrade the standards in the industry and counter existence of more “fly-by night” consulting firms and consultants. The industry, through IMPHIL, has been lobbying and working for the implementation of the accreditation of consultants for the past ten years but have faced a lot of difficulties in the process of doing so.

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The accreditation of consultants would help a lot in improving demand and factor conditions in the industry. A reduction in the number of short-term, one to two projects, fly-by night consultants and consulting firms can be made if this is implemented. The poor image of consultants will be addressed. The accreditation would also pave the way to easily market and promote the services of consulting firms and consultants among local and international clients. Issue 4: Lack of industry-wide information on market opportunities abroad. Most efforts with regards to market research related to consulting opportunities abroad are done on a per-company or individual basis. There is no institutional information network to assist management consulting firms in expanding their market. Issue 5: Existence of numerous small to medium-sized general management consulting firms and consultants but lack of locally-established firms with highly specialized expertise. Global trends as well as available local data shows that differentiation is a factor in the success of many small to medium-sized consulting firms.

The Philippine management consulting community is being challenged to develop new services as a result of rising client expectations and sophistication, changes in the information technology and growing competition. Through research and study of the current advances in the industry, the Philippine management consulting community can differentiate and customize them to specific client needs. Philippines’ strength in management consulting is the small and sectoral expertise of some players in the industry and it is a particular challenge for these knowledge-based companies to focus significant human resources on new service development. Issue 6: There is a need to develop the limited domestic market for management consulting in the Philippines. To enhance the competitiveness and capability of management consulting firms, there is a need to expand opportunities for management consulting in the domestic market. Private clients are limited to large players in the industry which are mostly multinational which either have their own internal consultants or would prefer international management consulting firms recommended by their mother companies. Very few small and medium-sized firms seek the assistance of consultants since this is considered an ”expense”. The Philippine domestic market is not as sophisticated as the clients found in Europe or United States where small and medium-sized ventures are very much open and encouraged to seek the expertise and assistance of management consulting firms to ensure productivity and profitability.

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Projects obtained through international funding institutions and government agencies are limited to the available official development assistance and national budget. There are trends that show a decrease in the official development assistance as well as increasing number of international players to compete with in the projects. Issue 7: There is a growing need for more sole practitioners and small to medium-sized management consulting firms to be export-ready. Global market information point out to internationalization of the market and need to strengthen the players in the various industries including management consulting.

With the expertise and knowledge resident in the small and

medium-sized firms, there is significant potential to take advantage of the growing global market. The smaller firms usually cannot compete with foreign firms for large projects, but with the specialized functional and sectoral knowledge, they can take on niche assignments with larger firms. Issue 8: Absence of a focused marketing strategy aimed at promoting and developing the industry towards preparation for the international market. Along with a growing need to strengthen the management consulting capabilities of the players in the industry, there is also a similar need to market the companies who are capable and willing to compete abroad. In the face of a limited domestic market, there is a need to expand further into other markets outside the country. Issue 9: There is a growing threat posed by technology consulting firms among management consulting firms. The emergence and growth of technology consulting firms point out to a growing demand of clients for information-technology related services. Information technology plays a big role in the businesses of many companies. Slowly, even in government, technology is playing an important role in systems and processes. Technology consulting firms pose a big threat to management consulting firms especially to those targeting private sector client companies. Private companies and government corporations, in the past years have invested heavily on computerization and business process reengineering. The strategy of many consulting firms now is to recruit business graduates to complement their technical expertise. These firms have realized the need to understand business strategy and processes. This led to solutions known as Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), e-commerce and e-business solutions. Since many technology consulting firms are also software vendors which are used in the implementation of the business processes developed, then it is expected that switching costs will be high. Therefore, these technology consulting firms are expected to be there for a longer time to monitor

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implementation of systems that they placed. This has eaten a significant share in the market of management consulting firms offering services related to business process engineering, systems evaluation and systems audit. It is not impossible that these technology consulting firms can grow and become a full-service consulting firm offering strategic management services and business intelligence. This is not far-fetched since the services they offer now are related to tools to implement strategies and tools to obtain continuous business information to make sound decisions. Issue 10: There is a rapid growth in the number of consultants offering management advice, without a widely accepted level of standards, standards of conduct, then the industry is bound to be negatively affected both locally and globally.

Since there are no stiff entrance requirements for practicing inthe industry

that are equivalent to other professions. Some of these “ consultants” do not have training in management consultancy processes and do not subscribe to professional code of ethics in consulting.

Issue 11: IMPHIL, as an industry association needs to build its capacity to meet the challenges posed by the growth in the industry.

The mission of IMPHIL is to support and promote the development of professional management consulting, advance the excellence of practice of professional management consulting, achieve recognition of the value-added by professional management consulting and IMPHIL’ s designation as the standard for the profession. As the national voice of management consulting, IMPHIL is an important vehicle for strengthening the management consulting industry. However, there are efforts that need to be taken for more players in the management consulting industry to be more aware of IMPHIL’s role in the industry and to also participate in similar efforts taken by IMPHIL. Issue 12: The increasingly competitive marketplace dictates that in order to meet the challenges of the knowledge-based economy, firms are required to innovate constantly in order to react quickly to changes. Shortages of time, people and capital are major drivers why firms explore the use of external sources of expertise known as outsourcing. Outsourcing as a practice in the industry ranges from routine, project-based, short-term contracts to cooperative agreements, including partnerships and strategic alliances. This is why many established consulting firms invest to maintain a database of available consultants and experts as well as consulting firm partners to rely on for particularly large projects.

Outsourcing of non-core competencies and government privatization are

also emerging as growth areas for expansion of market of consultants. Some information technology, human resources, and financial management

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consulting firms have the capabilities to become involved in managing outsourced operations.

Companies agree that outsourcing enhances access to innovation and

strengthen company linkages to the national system of innovation. They are no longer concerned that by outsourcing they will lose their in-house expertise or ability to learn. On the contrary, they are eager to learn as much as possible from the experience of the contractor. Outsourcing will continue to expand because it is a global phenomenon reflecting changes in the marketplace in an environment of freer access to knowledge and the rapid pace of technological change.

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10. Action Plan enhancing Competitiveness 10.1 Recommendations

Based on the analysis of the issues confronting the industry, factor, conditions of the industry as well as corresponding opportunities and threats that players face in the emerging global market, below are the recommendations and action plan to enhance competitiveness of the Philippine management consulting services industry.

In seeking to promote the growth and national development of the

Philippines Consulting Industry in general and the Filipino consultants in particular, the proposed action plan will approach the objective at three levels: The government, COFILCO itself (being an umbrella organization that represents Filipino professional consultants) and the other related organizations levels, which includes IMPHIL. Parallel to these approaches will be a legislative approvals of reviving the passage of the proposed National Consultancy Act:

Government Level: 2. To seek a government policy statement that the government

supports the engagement of Filipino Consultants and an assurance of a level playing field: a. in loan negotiations b. in project scoping and position c. in national project (should hire consultants instead of hiring

employees, as in-house staff of the agency, limit agency capability to contract management

2. Engagement of the Filipinos as prime or lead consultants. For foreign assisted project, must be at least joint ventures (50-50 min) with the Filipino consultants for two(2) years, then Filipino consultants as lead consultant for the next five (5) years, and then 100% totally Filipino consultants onwards. For locally funded project, only Filipino consultants as lead or Prime consultants. 3. Increasing the fees of local consultants. Standard rates (minimum) for local consultants, for locally-funded projects. Standard rates for Filipino consultants at international rates for international selection of consultants.

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4. It is strongly recommended that the Implementing Rules and Regulations of E.O.164 the procurement of Consulting Services for Government Projects, or the Consultancy IRR which provided a systematic and standard set of procedures in the hiring of local and foreign consultants be strictly and fully implemented. The consultancy IRR was conceived to develop a more orderly, uniform and transparent set of procedures in the selection of consultants and likewise increase the participation of local consultants as well as to provide adequate and fair systems, rules and conditions governing government’s procurement of consulting services many projects. No less than the former president Fidel V. Ramos in 1992 articulated the fact that successful consultancy implies rich project experience and high technical capabilities, as demonstrated by Filipino consultants in a wide and diverse range of fields. “They not only provide needed expertise to plan, build and manage project in the country, but also in foreign exchange from project involvements abroad,” but first track record must be developed. And this was not the general case among local consultants. Their flight was sad and a lonely one. Their experience in obtaining government project since the consultancy IRR was characterized by frustration and disappointment. They have become a second rate citizen in their own country and moved in the shadow of their foreign counterparts as regards to governments projects. The Philippine Management Consulting Industry is a potential giant if given an opportunity to grow and develop its wings to become a force to contend with global management consulting. The industry is now expressive of its remaining hope on the full implementation of the Consultancy IRR to fulfill its four basic principles. These are: first, to achieve maximum efficiency and economy in the development and implementation of development projects and related activities; second, to enhance the growth of the local consulting industry and to optimize the use of local expertise, material and resources; third, to bring about the transfer of new technology into the country; and fourth, to maintain transparency of government procurement processes and procedures. The local consultants are one in the export potential of their craft but a faithful compliance of the consultancy IRR is a necessity whose time has come.

5. Monitor through NEDA, EDC and congress committee on trade and

industry the full implementation of the consultancy IRR. In the spirit of the transparency, there is a need to publish in the Web, the list of the government projects for bidding in line with the E-Commerce act.

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6. Revive and lobby for the passage of the National Consultancy Services Act which was based on E.O.164. There is no law governing the consulting industry which calls for an organized regulatory body of government that will supervise, control and enhance the industry, and in the selection and hiring of consultants for government infrastructure and other projects giving priority to Filipinos and/or Philippine Consulting firms thus make them globally competitive.

7. Impose penalty for consultants not complying with the NEDA

guidelines. 8. To assist the Filipino consultants to penetrate and maximize

participation in the international market.

• Policy to support the local consultants in foreign assisted local projects to develop capability and gain experience.

• Policy to promote local consultants through trade shows, advertisements by the Philippine government

• Policy to support Filipino consultants to obtain software license at reasonable rates and terms.

• Provision for incentives such as tax breaks to those who penetrate the international market.

COFILCO Level and other related association level 1. Continuous dialogue with cabinet secretaries involved in policies related to

infrastructure and hiring consultants. DTI, NEDA, DPWH, DOTC, DILG, NPC, NHA, PPA and NIA.

2. Capability-building of IMPHIL. IMPHIL, with the support of the government and other non-member players in the industry should be able to build its capacity through an aggressive campaign in increasing membership and developing programs to be able to achieve the objectives for which it was founded. IMPHIL was primarily found to represent the management consulting industry as well as assist in enhancing the competitiveness of the industry. It has a big role to play in competitiveness-enhancement of the industry. Its members are among the well-established and long-existent consulting firms in the country, but with the increasing diversity in size and specialization of management consulting firms, it would have been ideal to have significant representations of the other management consulting firms. IMPHIL should make aggressive efforts to open its doors to more number of members who can commit to its existing code of professional ethics. This can be done through regular press releases, regular updating of its website, organizing professional development programs for management consultants, maintaining a secretariat, developing strong

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linkages with local professional and industry associations and international associations.

Regular press releases, possibly in publications like government newsletters, professional and industry associations’ newsletters, client companies’ newsletters, newspapers’ business sections, business magazines, academic newsletters and community newsletters are possible means for the industry to become aware of the existence of the organization. IMPHIL may not need to invest much in this if it can use its network linkages with the government (like DTI, NEDA), its clients, professional and industry associations where some of the consultants or key employees of IMPHIL’s member firms are associated and linkages with academe where some of IMPHIL member firms’ part-time consultants are connected. The regular press releases may contain any announcements of upcoming actitivities of IMPHIL, trends in the industry based on regular mini-surveys that can be conducted by IMPHIL, publishable success stories with IMPHIL members’ clients, management consulting practices, among others. Through regular press releases, IMPHIL may build its image and reputation to attract other consultants, and consulting firms to join the organization.

IMPHIL’s website should also be updated regularly which can contain the information mentioned to be made available in newspapers and/or newsletters (publishable success stories, management consulting practices, trends and upcoming activities). The website should offer vast array of information and guidance that can assist the management consulting community to stay competitive. If possible, the website can also be developed to become interactive to be able to give a chance to clients and prospective clients to inquire about the consulting firms and the available services that they can offer. This website can link with DTI’s PhilTINS “one-stop” system once it is fully operational to for potential domestic and foreign clients to have access to management consulting service providers and promote IMPHIL to non-members.

A professional development program can be developed by IMPHIL with

two objectives, one is to give quality training for management consultants and their employees so as to upgrade standards of excellence in the practice of the profession, and another objective is to promote IMPHIL among non-member consulting firms who can also avail of the training and development programs. IMPHIL’s member firms have proven experiences in organizing conferences and conventions so this may not pose problems for IMPHIL, fees may be charged to members and non-members. IMPHIL’s professional development program should include workshops/seminars on new trends in management consulting practices such as result-based practice, virtual organizations, cross-discipline practice, boutique operations, brand marketing, information technology applications, and other topics that will build interests for members and non-member firms who are enjoined to

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attend. The extensive professional development program will assist in attracting more members to IMPHIL as well as defining the standards, code of ethics and higher level of assurance to industry’s clientele , thereby, raising the industry’s image to both domestic and international environment. These conferences, conventions and seminars can serve as a means to promote IMPHIL as well as ensure a cooperative competition among the players in the industry.

But for all of these activities to be implemented, IMPHIL would need to

form a secretariat to really work for the achievement of IMPHIL’s objectives. IMPHIL officers cannot do the work on their own, there are a lot of things that would need to be acted upon to help the industry become competitive.

IMPHIL needs to build tighter linkages with all stakeholders and industry

cluster in order to have a wider coverage for its program for achieving excellence in management consulting. IMPHIL can forge stronger linkages (through joint-sponsored programs and events) with important local organizations especially those of non-traditional providers of management consulting firms, suppliers, and customers. Some of these associations are the Marketing Opinion and Research Society (MORES), Philippine Institute of Certified Public Accountants (PICPA), Philippine Software Association (PSA), Personnel Management Association of the Philippines (PMAP), Public Relations Society of the Philippines, associations in the printing and publishing industry, other professional organizations in engineering, economics, statistics, environmental science as well as associations in the field of printing and publishing, association of non-government organizations and association of foundations in the Philippines and other relevant industry associations based on services offered and markets served by players in the management consulting industry. Cooperation and information sharing between firms in the business advisory services, professional services and management consulting industry should be initiated. This would bring about not only creating a better image for management consultants and IMPHIL but also develop new markets for the industry.

Likewise, establishing strong linkages with international associations like

those shown in Appendix H is necessary as trends towards globalization of markets increase. IMPHIL can initiate attendance of representatives in international conventions, conferences and symposia sponsored by these associations to build networks for market development as well as update local players with new trends in the global market.

Strengthening the domestic market. The industry is characterized by a

competitive environment where the supply exceeds the demand and there are low barriers to entry. To have a well-developed domestic market there are three important stakeholders who will play a role in the strengthening of the domestic market: the customers, the providers of services and the suppliers.

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The customer base need to be expanded. At present, there are

opportunities that can be developed in the domestic market among small and medium sized firms which are not used to hiring consultants, large firms which have preferential treatment for foreign consultants and government and non-government organizations which have research and consultancy needs in their projects but may not have access to available consulting firms they can tap. Among small and medium sized firms, IMPHIL can spearhead an aggressive awareness campaign to introduce the organization and its member firms along with service capability to some associations of small and medium sized firms like the Philippine Exporters’ Association (PHILEXPORT), for example. The same campaign may be done to Chambers of Commerce (Philippine, American, Chinese, Australia-New Zealand, European) and Non-Government Organizations’ associations. Campaigns can be done through provision of brochures which were already prepared by IMPHIL to these associations. Government can also assist through DTI or DFA in representing the industry to these associations or assisting in establishing linkages between the associations. IMPHIL can also forge linkages with industry associations like PCCI and the like. Presentation and promotion of services among their member firms can be made to make more companies aware of availability of local consultants who can offer the same quality of services as their foreign counterparts as well as strengthen the position of the Philippine management consulting firms locally and lessen the threat of new entrants. Government, as an institution with significant share in the market of consulting firms should give opportunities to consulting companies, specifically those that can be accredited to provide quality services according to their expertise, to be able to assist in building their track record in the industry.

The providers of management consulting services, especially the small

and medium-sized players need to strengthen outsourcing capabilities to be able to meet the diverse needs of clients and compete with large multi-functional consulting firms. But at the same time, greater differentiation in core competencies should be developed.

Joint ventures between foreign and local consulting firms should be

encouraged to foster technology transfer and training. There is a need for consulting firms to strengthen technology through management tools. But these ventures should be viewed as a long-term partnership for both parties. The contractual agreement should clearly define responsibilites of each firm.

Important suppliers of human resources, information and technology

should likewise be developed. Academic institutions and professional schools should be encouraged to offer electives in management consulting services and practices(management services , for accountants) as well as opportunities to conduct practicum training in consulting firms to develop

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awareness among future business leaders about the role that management consulting play in the economy. This will create opportunities for acceptance of management consulting in the future among these business leaders as an important tool to assist management and not just another “expense or cost” that a company would incur. In the Philippines, unlike in more developed countries like US and Europe where consulting is a standard, expected business practice, Filipino consulting firms, especially the small and medium-sized firms are not used to getting consultants. Cooperation from Information suppliers like the government agencies such as NSO, NSCB, SEC, and DTI is needed. This is further explained in the next section of this study concerning performance monitoring scheme. Technology suppliers such as software vendors in the Philippines can assist the industry in developing partnerships with consulting firms to develop branded solutions especially for specialized services offered by management consulting firms. This is can be similar to branded solutions developed by market research firms. This is speicifcally applicable for management consulting firms with differentiated core competencies. IMPHIL can assist in identifying these firms with differentiated core competencies.

Expansion into the foreign market. With a limited domestic market,

The industry would have to find ways to enhance competitiveness and expand market into foreign shores. This can be implemented through (1) identification of players with extensive track record in foreign countries and those who are committed towards expanding their market overseas; (2) assist in developing capabilities for international market penetration of these players; (3) monitor performance in foreign markets and continuously provide information on market opportunities abroad.

In identifying the players in the industry with extensive foreign experience, based on the profile of players in the industry, particularly IMPHIL members, it can be gauged that many of the consulting firms who were able to be successfully engaged in international projects or projects overseas are those in the areas of development studies and environmental management, engineering and technology consulting through projects with international funding institutions, or partnerships/affiliation with foreign consulting companies. These are the major areas seen where consulting firms can possibly compete in foreign markets. To assist in building capacities for international market penetration, these players identified can be tapped to represent IMPHIL in international symposia, conferences, sponsored by international consulting associations to be able to network with possible partners, affiliates and clients. Alliances of the established players with extensive foreign experience with other players who have developed their capabilities well but have not had as extensive opportunities as their counterparts can be a means to foster sharing of information, capability building as well as development of specialists. These

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are cooperative strategies that may be attractive to organizations with limited financial, technological and human resources to contend with. Alliances and consortia among local consulting firms of various specializations should be encouraged. These firms can complement each others capability and expertise to compete with the international market needs’ for projects. They are not formed to undertake a specific project , but exist as a pool of resources available on demand. The lead firm explores markets in developed or developing countries and identifies the consulting firm (or group of firms) in the consortium best suited to provide the required services

Also, through its international affiliations, IMPHIL can facilitate global

collaboration among management consultants. Establishing and strengthening a secretariat for IMPHIL would go along way to implement these collaborative actions. This will build the electronic infrastructure to facilitate formal and informal connections between Philippine members and members of institutes in other countries. The level of association between Philippine consultants and consultants in other countries will measure the progress made on the issue.

Trade commissioners in foreign posts can benefit from informed,

immediate support in promoting the industry. The IMPHIL and government-initiated agencies can examine the feasibility of a “secondment” progam that would place experienced management consultants in selected number of foreign posts for a specified period, say, for two-year terms. The countries selected would be in which the Philippines has significant business opportunities. The secondees would be involved in formulating and chanelling specific opportunities to Philippine management consultants. The secondees could also build relationships with local consulting firms and contractors of large projects. Such relationships can provide valuable intelligence about required service offerings in the global market.

Also with the ongoing, computerization efforts in the government, if these

are successfully implemented through the GISP, management consulting industry can benefit with its access to better information and access to better communication

Institutionalize the development of the management consulting

services sector. Governments and private Sector should recognize that developing the local consulting profession is a long-term process of institutional development. Based on the development of human resource, information and technology. These can be done through the following:

• A team should be designated as the focal point with

responsibility in preparing and monitoring the strategy and plan of action for developing the profession. This can be a combination of representatives from the associations and DTI.

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• Universities, professional societies, and national associations of consultants should play a more active and effective role in raising the professional standards and quality of performance of the domestic profession. Formal linkages between professional schools and the consulting industry should be established. This practice is prevalent in other countries especially in the US which paved the way for development of new management tools and specialists.

• Participation of Philippine consulates as institutional marketing arm of the industry in different countries. Consulates abroad should engage in aggressive marketing efforts to market services abroad and conduct follow-through on targeted partners and clients. Targeted clients are those who may want to conduct business in the Philippines and would need consulting assistance or foreign companies who would want to get the services of Filipino consultants/consulting firms.

• In management consulting, clustering can initially be done by identifying clusters that can be grouped according to classification of firms based on specialization. This enables the industry to better identify specific trends and issues within the cluster, and these may differ across the different classifications of firms. Genuine interest and commitment from those identified to work for competitiveness enhancement should then be assured. These will become agents of change , they are key agents who may be players in the industry, suppliers, customers, who can attract the participation of key business and government leaders. Key representatives from the public sector should be enjoined in the cluster. Table 41 below shows possible groupings according to areas of specialization.

Table 41. Possible groupings of stakeholders according to area of specialization

Area of Specialization Stakeholders Human Resource Management/Training/ Executive Recruitment

Institute of Management Consultants of the Philippines (IMPHIL) Personnel Managers’ Association of the Philippines (PMAP) Department of Trade and Industry (DTI) Department of Labor and Employment (DOLE) Philippine Industrial Relations Society (PIRS) Development Academy of the Philippines (DAP) Printing and publishing industry associations Conference/Convention/Training Centers/Hotels and Restaurants Colleges and universities Staff Recruitment Agencies

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Financial Management Institute of Management Consultants of the Philippines (IMPHIL) Philippine Institute of Certified Public Accountants (PICPA) Bankers’ Association of the Philippines (BAP) Department of Trade and Industry (DTI) Department of Finance (DOF)/Department of Budget Management (DBM)/Commission on Audit (COA) Philippine Software Association (PSA) Colleges and Universities Printing and publishing industry associations Tax consultants and auditors

Production/ Operations Management

ISO consultants Certificate International Phils., Inc. Professional Engineers’ associations (Mechanical, Electrical, Industrial) Philippine Software Association (PSA) Department of Trade and Industry (DTI) Colleges and unievrsities Printing and publishing industry associations

Marketing Management

Institute of Management Consultants of the Philippines (IMPHIL) Marketing Opinion and Research Society (MORES) Philippine Marketing Association (PMA) Association of Marketing Educators (AME) Philippine Software Association (PSA) Department of Trade and Industry (DTI) Colleges and universities Printing and publishing industry associations Television, Radio/Broadcasting industry

Development Studies and Environmental Management

Institute of Management Consultants of the Philippines (IMPHIL) Environmental service providers Non-Government Organizations’ associations Association of Foundations in the Philippines Philippine Software Association (PSA) Department of Trade and Industry (DTI) Research organizations Colleges and Universities Printing and publishing industry associations

10.2 Performance Monitoring Scheme

To properly monitor the performance of the industry , the following are the key result areas that need to be addressed.

National Information database. Based on the data presented on the profile of establishments and practicing consultants in the Philippines, it can be gauged that one of the weaknesses of the industry is the weak database it has. There is

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lack of information to monitor the performance and contribution of the management consulting service subsector to the economy.

In this aspect, there should be a close coordination between the information

centers of the National Statistics Office, Securities and Exchange Commission, Department of Trade and Industry and IMPHIL, as a representative from the industry sector to identify the needs of the industry in the performance of growth and opportunities. Specifically, the following improvements can be made:

• through the government, the PSIC should be harmonized with the UN

CPC classification/definition to have a common framework by which management consulting industry is monitored. Specifically, exclude the activities of management holding companies in the PSIC definition

• through IMPHIL, regular surveys through e-mail can be conducted among its members and possibly, other non-members to establish a database that is necessary and useful in establishing specific strategies that IMPHIL can take in addressing new issues and challenges in the market. This should be done on a regular basis to confront the changing market conditions and ensure competitiveness of its members and the industry, in general. In other organizations like FIDIC, for example, this is regularly done to determine emerging trends in the market. The following are some of the suggested surveys that can be conducted at different points in time:

o Survey on the amount/percentage share of sales generated by each company

- classified by industry/sectors served - classified by services rendered - classified by source (domestic sales or export sales) This will assist in identifying trends in the market and market performance. It will also support any marketing activities

that can be initiated by IMPHIL to improve performance in the domestic and foreign market.

o Survey on training needs. This will assist IMPHIL in the design and implementation of a professional development program that can assist capability building in the industry.

o Survey on professional designations and expertise of consultants in the Philippines. This will assist IMPHIL in determining outsourcing strategies especially for larger projects where cooperative collaborations are formed to better compete in the market.

o Survey on the extent by which information technology is used in the companies. This will again assist IMPHIL in determining information-technology related seminars that can be conducted through the professional development program of IMPHIL.

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Accreditation of Consultants. An accreditation system of management consultants may be implemented with the assistance of the Department of Trade and Industry, NEDA and IMPHIL to establish consultancy as a profession and safeguard the quality of consultancy services in the Philippines.

An accreditation system of management consultants may be implemented

by DTI and IMPHIL to establish consultancy as a profession and to safeguard the quality of consulting services delivered. It is necessary, that an appropriate legislation , especially of similar measures like the National Consultancy Act may be lobbied by IMPHIL and COFILCO for DTI to implement such accreditation. Accreditation by specialization may provide proper categorization of consultants. The Certified Management Consultant (CMC) designation on practitioners who successfully complete its course of study and practical experience requirements and adhere to uniform code of professional conduct can be given according to area of expertise or specialization.

A tax incentive scheme for companies including small and medium sized

firms who will avail of consulting services from accredited consultants may likewise be implemented through proper legislation in order to generate more patronage for local consulting firms. This will create additional domestic demand for the consulting profession.

It is also perceived as necessary to provide the accreditation system a

verification framework (through forms verified by third parties). The scheme would work to expose consultants, local or foreign who are not qualified; not allowed by immigration and labor laws to engage in consultancy; and expose dummy corporate fronts of foreign consultants.

The accreditation scheme should work for on-line, simple, transparent and

reasonable accreditation standard as well as ethical standards. COFILCO forwarded some proposals on this issue of accreditation standards

worthy of consideration: • Management capability, office space, equipment and administration

support • Resources such as hardware, software, vehicles, laboratory

equipment, etc. • Manpower resources, regular staff, temporary staff, consultants, cadd

staff, support staff • Key staff • Completed projects • Third party verification and audit of consultant’s accreditation

statements. • Accreditation to be recommended by recognized accredited

organization

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11 Directory A. Member Firms of the Institute of Management Consultants of the Philippines Asia Business Consultants (ABC) 3rd Floor, Basic Petroleum Building Carlos Palanca Street, Legaspi Village, Makati City Telephone Numbers 8100038/8100043 Fax Number 8164137

Cesar Virata and Associated, Incorporated G/F Development Academy of the Philippines San Miguel Avenue, Pasig City Telephone Numbers 6312173/6335560 Fax Number 6312161

Associated Resources of Managemnet and Development (ARMDEV) 1-C Corner Masunurin Street and Anonas Extension Sikatuna Village, Quezon City Telephone Numbers 9244821/4331431 Fax Number 4331088

Cm technologies, incorporated 114 samapaguita Street , Valle Verde 2 Pasig City Telephone Number 6310836 E-mail CMTECH@vasia.com

AYC Consultants, Incorporated 14th Floor Sagittarius Building HV dela Costa Street, Legaspi Village, Makati City Telephone Number 8109606 to 10 Fax Number 8108007

DTTI Consultancy, Phils, Incorporated 3rd Floor Don Jacinto building Dela Rosa cornerSalcedo Streets Legaspi Village, Makati City Telephone Numbers 8170031 to 34 Fax Number 8160649

Carlos Valdez & Company Carlos valdez Building, 108 Aguirre Street Legaspi Village, Makati City Telephone Numbers 8925932/5278491 Fax Number: 5273538

Economic Development Foundation 12th floor Tower II, Cityland 10 HV Dela Costa corner Valero Streets, Salcedo Village, Makati City Telephone Numbers 8100674/8100669 Fax Numbers : 8189269/8100833

J Cunanan & Company/PricewaterhouseCoopers 14th Floor Multinational Bancorporation Centre 6805 Ayala Avenue, Makati City Telephone Numbers 8452728 to 29 local 445 Fax Numbers 8452806/8450354

SEA Consultants, Incorporated 2nd Floor Concorde Building A, Benavidez corner Salcedo Street, Legaspi Village, Makati City Telephone Number 8158790 Fax Number 8156587

Laya Manangahaya Salgado & Company 22nd Floor Antel 1000 Corporate Centre 139 Valero Street, Salecedo Village, makati City Telephone Numbers 8189470/8938507 Fax Numbers 8166595/8941985/8166595

SEARCA Consulting S ervices SEAMEO Regional Center for Graduate Study and Research in Agriculture College, Laguna Telephone Numbers 5362914/5362363 to 65 Fax Number 5362914

Leverage International Consultants, Incorporated Suite 84 Legaspi Suite, 178 Salcedo Street Legaspi Village, Makati City Telephone Number 8101389 Fax Number 8101594

Sunrise Industries Development Incorporated Suite 1113, 11th Floor National Life Building Ayala Avenue, Makati City Cellphone Number 09188285507 Pager Number 141722676

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Website: http://www.leverage-international.com Mandala Agricultural development Corporation (MADECOR) Unit 302 Prestige Tower Emerald Avenue, Ortigas Center, Pasig City Telephone Number 6381600 Fax Number 6384185

Sycip Gorres & Velayo Company SGV Building 6758 Ayala Avenue, Makati City Telephone Numbers 8910307/8910517 Fax Numbers 8174193/8190872

Orient Integrated Development Consultants, Inc. FSS Building 1, 89 Scout Castor Street Quezon City Telephone Number 4132187 Fax Number 4132326

Urban Integrated Consultants 4th Floor Columbian Building 160 west Avenue, quezon City Telephone Numbers 9285481/9297902 Fax Number 9325787

Pacific Rim Innovation and Management Exponents (PRIMEX) 502 Manila Luxury Condominium Pearl Drive Pasig City Telephone Number 6339052 Fax Number 6347340/6347339 e-mail Address: primex@primexinc.com.ph Website: http://www.primexinc.com.ph

Ward Howellzmg 5th floor Athaneum Building 160 Alfaro Street Salcedo Village, Makati City Telephone Number 8162466 Fax Number 8172543

B. Partial list of Non-Member Management Consulancy Service Firms in

the Philippines Traditional providers of management consulting services Finance and Investment Management Consulting Incuventure Asset Managers Makati City Telephone Number: 8999641 e-mail Address: etrade@info.com

Hambrecht and Quis Philippines 22F PCI Bank Tower II Makati Avenue cor. H.V De La Costa Makati Telephone Number 8195776 e-mail Address: www.jpmhq.com

Walden AB Ayala Management 22F 6750 Ayala Avenue Makati City Telephone Number 8135253 Website:http://www.wiig.com/main/philippines.htm

CL Manabat & Co./ Deloitte Touche Tohmatsu Penthouse Salamin Building 197 Salcedo Street Legaspi Village, Makati City Telephone Number 8120535 Fax Number 8105047 Website: http://www.deloitteap.com/practices/prac_phil.html

Equity Managers Asia Inc. Jollibee Plaza, Ortigas Center, Pasig City Telephone Number 830200 e-mail Address: lindaya@equityasia.com

Development, Environmental and Policy Studies Center for Empowerment and Resources ENR Consultants

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2-A San Pablo Road, Phil-Am Homes, Quezon City Telephone Number 4117337/9287775/9251641/ e-mail Address: cerd@wequest.com Website: http://ww.philngo.com/cerd1.htm

2nd Flr., FSS Bldg., 89 Scout Casto Brgy. Laging Handa, Q.C.

Cest Inc. 10th Flr., Strata 200 Bldg., Emerald Ave., Ortigas Center, Pasig City

Louis Berger International Inc. TM8910 Milelong Center, Amorsolo cor. Herrera Sts. Telephone Number 81234556/8121646 to 49 e-mail Address: rhirsch@louisberger.com Website: www.louisberger.com

Meganomics Specialists International Inc. Suite 512 Pasda Mansion 77 Panay Avenue cor Timog Avenue Quezon City Telephone Number 3730618/ 4101355 e-mail Address: villegas@compass.com.ph. meganomics@pacific.net Website: http://meganomisc.com.ph

Peakground Institute of Policy Research, Inc. Tapulanga Street Espinos Village II Bacolod City Telephone Numbers (034) 29597 and (034) 7085173 Manila Number 7233043 Email Address: pgipri@bcd.weblinq.com Website: http://www.wbi.ph/pgipri

Human Resource Management Center for Leadership and Change G/F Hoffner Bldg., Ateneo de Mla. Loyola Hts. Quezon City Telephone Number 9207216

Enterprise Development Group, Asia Pacific 402 Vicente Madrigal building 6793 Ayala Avenue, makati City, Philippines Telephone Number 8922896 Fax Number 8922902 Email-Address ancilla@iconn.com.ph Website: http://www.enterprisedevelop.com

Guthrie Jensen Consultants 5/F Glass Tower Bldg., 115 Palanca Legaspi Village, Makati City Telephone Number 5161610 Website: guthrie_jensen.com.ph

Manila Execon Group 5F Maripola Bldg., 109 Perea St., Legaspi Village Mkt Telephone Number 8942865

Philips Associate Management Consultants Website:http://phillipassociates.net/welcome.html

Integrative Learning International Website: http://www.integrativelearning.com

Impact of Consultancy Group 2F Comfoods Building, Sen Gil Puyat Avenue cor. Chino Roces St. Makati City Telephone Number: 8434071/ 8432167 http://www.philone.com.ph/~impact/profile.htm

Aedan Associates 6 Buencamino St. Alabang Zapote Road Muntinlupa Telephone Number: 8074784 e-mail Address: solace@pacific.net.ph

Alba Romeo Management Consultants 7F Don Chua Lamco Building Alfaro St., Salcedo Village, Makati City Telephone Number: 8159086 e-mail Address: mahatma@edsamail.com.ph

Stream Training Consultancy 42 East Capital Dr., Bo. Kapitolyo, Pasig City Telephone Number 6314807 e-mail Address: jihautea@info.com.ph

John Clements Consultants 2F RCI Bldg., 105 Rada Street Legaspi Village Telephone Number 8171650/ 8176730/ 8178949 e-mail Address: jccinc@johnclements.com

ProSearch 5301 Cristina Condominium 143 Herrera Legaspi Vill. Telephone Number 8140243

Amrop International 1704 Antel 2000 Corporate Center 121 Valero St.

Asia Partnership Phils. (APPI) Website: http://asiapartenrs.net

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Salcedo Village, Makati City Telephone Number 8453463/ 8871620 e-mail Address: Amropmanila@pacific.net.ph Website: www.saxbam.com/contact/philippines.htm

Watson Wyatt Phils. Website:http://www.watsonwaytt.com

Motivation Asia Phils. 602 One Corp. Plaza 845 Pasay Rd. Makati Telephone Number 8404061

Specialized Services Consultancy by Technicus Corp 7F Crown Plaza Bldg., North Reclamation Area Mandaue City Telephone Number 4120732

Isis Research Ltd. Telephone Number: 8931002/8924518 e-mail Address: Philippines@isisresearch.com Website: http://www.isisresearch.com

IMS Philippines 2F DPSI Business Center 210 N. Garcia St. Telephone Number 8900111

Business Recovery and Turnaround, Inc (BRTI) Suite 2105 Philippine Stock Exchange Centre Tektite East Tower , Exchange Road Ortigas Center Pasig City Telephone Numbers 6340741 to 45/6340319 Fax Numbers 6340736/6348881 Email Address: rtd@brti.net Website: http://www.brti.net

Asia Pacific Projects Incorporated 8 St Peter street Cubao, quezon City Telephone Numbers 7253209/7254372/ 4132892 Fax Numbers 8134781/4132892 E-Mail Address: info@asiapacofocprojects.com Website: http://www.asiapacificprojects.com

Solutions Inc. 1650 Penafrancia St., Santiago Village, Makati Telephone Number 8978689/8902737/ 8970729/ 8909078 Website:http://www.geocites.com/wallstreet/Exchange/3855

Wright Business & Management Consultancy Rm 301 Sunrise Center 488 P. Ocampo Sr. Street Malate, Manila Telephone Number 5266291 e-mail Address: wbmc@l-manila.com.ph Website: www.webspawner.com/users/pezaconsultant

Asiatech Resource Management Suite 315 National Life Building 6762 Ayala Avenue Makati City 1200 Telephone Number: 81500585

GMB Franchise Developers & Consultancy Firm Website: http://wwwgmbfranservice.com.ph

TeamAsia, Incorporated # 3 Lanuza Bay Southbay Garden Sucat, Paranaque City Telephone Numbers 8076370/ 5460908 Fax Numbers 8423308/ 5460914 E-mail Address: mahamlin@teamasia.com.ph Website: http://www.teamasia.com.ph

CAPDP Consultancy Service 6F Casho Gonzales

Building, 101 Aguirre St. Legaspi Village, Makati City

e-mail Address: cadp@mozcom.com Website: http://www.cadp-sugar.com

Institute of Public Health Management Unit 338 Eagle Court Condominium #26 Matalino St., Central District Quezon City Telephone Number: 4359254 e-mail Address: jphm@bigfoot.com Website:http://www.iphm.org

Escaler & Co. Inc. 504 National Life Bldg., Ayala Ave., Makati City Telephone Number 8187661/046-4140613

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Multi-functional Consulting Firms IDP Consult Inc. Website: http://www.intlpros.com

DTTI Consultancy 3F Don Jacinto Bldg., Dela Rosa corner Salcedo Sts. Legaspi Village, Makati City Telephone Number 8174346/ 8170031 to 33 e-mail Address: DMD_CPA@VASIA.COM

Neville Clarke Phils. Suite No. 3004-C, PSE Center, East Tower, Exchange Rd., Ortigas Center Pasig City

SGV-Devt. Dimensions 3F SGV II 6738 Ayala Ave. Mkti City Telephone Number 8910307

Ernst & Young Consulting 19F Tower 1 The Enterprise Center, 6766 Ayala Avenue , Makati City Telephone Number 8109741

General Management Aizen Enterprises Unit C-13 G/F Olympia Mansion 7912 Makati Avenue., Makati Telephone Number 8102597/ 5152912/ 8152940

BSA Sales Management #5 Bagtican Road, Pilar Village, Las Piñas City Telephone Number 8015921 e-mail Address: bsandres@world.net.ph

Innovision Strategic Dev’t Consulting Group Rm 205A Manila Midtown Hotel Website:http://www.innovision.homestead.com.ph

CLRV Neo-Synergy Telephone Number 9248896 e-mail Address: changrp@info.com.ph

RM Management Consulting #6-D Matapat St., Diliman, Quezon City Telephone Number 7259518

Non-Traditional Providers of Management Consulting Services

AC Nielsen (Pulse) 15th Floor, The Columbia Tower, Ortigas Ave., Greehnhills, Mandaluyong

FS & Associates Republic Glass Bldg., Salcedo Village Makati City Telephone Number 8181150

Taylor Nelson Sofres Phils. (Frank Small and Associates) GF Republic Glass Bldg., 196 Salcedo corner Aguirre Sts., Legaspi Village Makati City Telephone Number 8181150 e-mail Address: Manila.office@ph.tnsofres.com Website: www.tnsofres.com/about/asiapacific/philippines

Research Phils-Unisearch Inc. 41F Gloria Bldg., 109 Aguirre Legaspi Vilage Makati City Telephone Number 8109057

Trends-MBL Kalayaaan Ave. Quezon City Telephone Number 9253169/9253170/ 4358466/ e-mail Address: trendsdial@trends-mbl.com Website: http://www.trends-mbl.com

PSRC-Research International 10F One Magnificent Vile Bldg., San Miguel Ave., Ortigas Center, Pasig City Telephone Number 6384528/ 6384525 e-mail Address: psrcri@webquest.com

Asia Research Organization 21F Jollibee Plaza Bldg., Emerald Avenue, Ortigas Center, Pasig City Telephone Number 63113511/ 6313454 e-mail Address agl@info.com.ph /aglmr@edsamail.com.ph

Market Research International Phils. Telephone Number 9264427

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Website: http://www.aglmr.com

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Technology Consulting Andersen Consulting/ Accenture Telephone Number84101111 Website: www.arthurandersen.com

Asian Computer Group 3rd Flr. Republic Glass Bldg., 196 Salcedo Village., Makati City Telephone Number 8125122

Ayala Systems Technology, Inc. 3F Ayala Life Bldg., 6786 Ayala Avenue, Makati Telephone Number 8132494 to 2496 Website: www.astech.com.ph

Code Red Consultancy Website: http://www.code-red.co.uk/index.html

Corporate Information Solutions Telephone Number 599-33-01 to 14 Level II (515 Bldg., Meralco Cmpd Ortigas Ave., Pasig City

EDS International Phils. W702 PSE Centre Exchange Rd. Ortigas Center Pasig City Telephone Number 6370433

Iberpacific 9F Taipan Place, Emerald Avenue Ortigas Center, Pasig City Telephone Number: 6370957 Website: http://www.iberpacific.com

IEWorks Inc. 14F Tower B Gold Loop Tower Amber Avenue, Ortigas Center, Pasig City Telephone Number: 6339013 Website: http://www.ieworks.com

WeServSystems International 6th Flr. United Life Bldg., 837 A. Arnaiz Avenue, Legaspi Vilalge, Makti City Telephone Number 8124001/ 8121311/ 8121308 Website:http://www.fujitsu.com.ph/weserv.htm

James Martin & Co. Phils (Headstrong) 15F Urban Bank Plaza, Sen Gil Puyat corner Chino Roces Avenue, Makati City Telephone number: 8130861

Misnet Unit 304 heart Towe 108 Calero Street, Salcedo Village, Makati City Telephone Number : 8673587 Website: www.com.ph/misnet

Business Intelligence Control Risks Phils. 12F 1st e-bank Tower 8737 Paseo de Roxas 1259 Makati City Website: http://www.crg.com/offices/manila/manila.htm

Pinkerton Consulting Services 4F Thomas Jefferson Cultural Center 359 Sen Gil Puyat Aveneu 1200 Makati City Telephone Number 8993934/ 8959404

Construction/Engineering Consulting Asia Technicon Mgrs. & Cons Suite 603, The PEAK 107 LP Leviste St., Salcedo Vilalge Makati City Telephone Number 8482947 to 49 e-mail Address: consult@asiatechnicon.com Website:http://www.asiatechnicon.com

Cedco Telephones: (032)253-9321 * 253-2679 * 253-2683 * 253-9319 * 253-9310 3rd Floor, GMT II Buiding, corner P. del Rosario and Junquera Sts., Cebu City Website: http://www.cecophil.org./cedco.htm

Constech Mgmt. Group 2F Belson House Bldg., 271 Edsa Mandaluyong Telephone Number 7276620 to 27

ProConsult Inc. Penthouse Taft Office Center, 1996 Taft Avenue. Pasay City Telephone Number 8321533/ 8322110 e-mail Address: proconsult@pacific.net.ph Website: http://www.cecophil.org/procon.htm

SP Castro and Associates Sutie 601 Globe III Condominium San Miguel Avenue, Ortigas Center Pasig City Telephone Number 6334277/ 6355763/ 6375951 to 2 e-mail Address: spcastro@skyinet.net. Website: http://www.cecophil.org/spca.htm

Rider Hunt Labor 5F Oppen Bldg., 349 Sen Gil. Puyat Avenue Makati City Telephone Number 8905686/ 8905728/ 8971686 to 87 e-mail Address: liacrorrh@pworld.net.ph Website: http://www.riderhuntliacor.com

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Schema Konsult Inc. 7F JMT Corporate Condominium ADB Avenue Ortigas Center Pasig City Telephone Number 63111691 e-mail Address: schema@info.com.ph Website:http://www.cecophil.org/schema.htm

Planning Resource and Operations Systems 2/F Prudential Bank Bldg., Ortigas Ave. San Juan Telephone Number 7211661

RN Ferrer & Associates 5/F Padilla Bldg., Emerald Ave., Ortigas Center Telephone Number 6311541

Pacific Orient Consultants & Mgmt. 7484-A Dao St. SAV Makati Telephone Number 8908115 e-mail Addres pocmc@tri-isys.com

SFI MgmtCOnsultancy 105 West Avenue Quezon City Telephone Number 3711321 e-mail Address: sfmc@pacific.net.ph

Complete listing of Engineering consultants can be provided by: Council of Engineering Consultants of the Philippines (CECOPHIL) http://www.cecophil.org

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References

Association of Foundations Philippines. (2000). Donor Trends: A Resource Book of Development Assistance in the Philippines. Manila. Baum, W. and Kirmani, S. (1991). The Consulting Profession in Developing Countries: A Working Paper. The World Bank. Bureau of Export Trade Promotion-Department of Trade, Various articles provided by Philippine Special Trade Representatives and Past Industry Studies onProfessional Consulting Industry and Management Consulting Industry Hoekman, B. (1999). Towards a More Balanced and Comprehensive Services Agreement. Seattle: USA. Kubr, M. ed. (1996). Management Consulting: A Guide to the Profession (3rd edition). International Labour Organization. Geneva. National Economic and Development Authority. ODA Pipeline by Donor from 1997-2000. Porter, M. (1990). Competitive Advantage of Nations. Quinn, J.B. (Summer 2000). Sloan Management Review. Sumemr 2000. Reimus, B. (1997). Knowledge sharing within management consulting firms. http://www.kennedyinfo.com Securities and Exchange Commission. (2000). Philippine Business Profiles 1999-2000: Top 7000 Corporations. Manila SGV and Co. (1999). Doing Business in the Philippines. Manila. Whichard, O. (2000). Measurement Classification, and reporting of Services Activities:An International Perspective. Bureau of Economic Analysis;Washinton DC. http://www.filipinolinks.com/business/consultants.html (Web directory of Business Consultants, December 9, 2000) http://www.kennedyinfo.com/er/ekrgstud.html (Books on Management Consulting Firms, November 30, 2000) http://www.kennedyinfo.com/mc/cn50.html (50 Largest Management Consulting Firms, November 30 2000)

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http://www.adb.gov (Asian Development Bank) http://www.neda.gov.ph (National economic and Development Authority) http://www.dti.gov.ph (Department of Trade and Industry) http://www.usatrade.gov (Country Commercial Guide, November 21 2000) http://www.strategis.ic.ga (Candaian Consulting industry, November 21 2000) http://www.itd.org (World Trade Organization, November 20 2000) http://www.apmforum.com (Asia-Pacific Forum, November 20 2000) http://www. philexport.com (Philippine Exporters Confederation, December 8 2000)

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ANNEX A-1 - ONGOING GOVERNMENT ICT PROJECTS Project Title Project Title Project Title Project Title Description Description Description Description Proponent Proponent Proponent Proponent

Agency/Office Agency/Office Agency/Office Agency/Office

Duration Duration Duration Duration Project Cost / Project Cost / Project Cost / Project Cost /

Funding Source Funding Source Funding Source Funding Source AGRICULTURE/AGRARIAN SECTOR

Agriculture Information Network (Agrinet)

This project will put together all agricultural-related information generated by government and non-government organizations on production, post-production and marketing activities of farmers and fishermen. This will likewise involve the setting up a wide area network that will interconnect the regional field units (RFUs), bureaus, attached agencies and Research Outreach Stations (ROS) of the department.

Department of Agriculture (DA)

4-5 years PhP1.520M (PhP800M 1st year; PhP720M succeeding years)

Computerization of the Land Titling System

This involves computerization of the processing and issuance of land titles to improve the land management record system in the country.

Land Registration Authority (LRA)

13 years PhP3B

COMMUNICATION SECTOR National Telephone Program (NTP) Tranche I-2, ROT Stage II

Establishment of 13,728 digital telephone lines covering fourteen (14) municipalities in Regions VI, VII & VIII.

DOTC/CPMO-NTP 1-2

FRF 144,674,252 or PhP655.474 (FRF4.5=PhP1)

National Telephone Program (NTP) Tranche 1-3

Establishment of 32,800 digital telephone lines to 31 cities/municipalities in regions IX, X, XI & XII including high density 140 Mb/s backbone network.

DOTC-CPMO US$43M or PhP1,443.136 ($1=PhP28)

National Telephone Program (NTP), 1-3 Phase 4

Project involves the provision of a total of 45,000 telephone lines to 80 localities surrounding the NTP tranche 1-3 backbone in Mindanao areas and the establishment of a digital transmission network, thereby extending to

DOTC US$123.00M or PhP4.92B ($1=PhP40)

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underserved areas. Regional Telecommunications Development Project (RTDP) Phase C

Establishment and expansion of 6,200 digital telephone lines to 30 localities in regions I&II including establishment of backbone network to loop the RTDP communication network in CAR, Region I & II.

DOTC-CPMO Y 3,803.00 or PhP242.10 (PhP1=Y5)

Telecoms Component of Accelerating Growth, Investment and Liberalization with Equity (AGILE) Project

AGILE is an action-oriented activity to support economic policy liberalization and enhance competition in the Philippines. It will restructure and consolidate the USAID/Manila approach to improve the Philippine economic policy environment.

DOTC/NTC 1998-present US$1.0M of US$27.0M or Php40.0M of PhP1.08B ($1=PhP40)

Data Communications Engineering

Individual Expert Dispatch DOTC-TTI August 1997- March 2000

Advanced Telecommunications Outside Plant Technology – Fiber Optics

Improved Technical and Technological Education/Training for 16 people.

DOTC-TTI 1998-2002

DOST Bicutan Fiber Optic Backbone project

This project is an FDDI/Switched Ethernet backbone. This backbone is a 100Mbps Fiber Distributed Data Interface (FDDI) network, a high performance fiber optic timed token ring LAN running at 100Mbps over distances up to 200Kms with up to 1000 stations connected, that connects a ring of thirteen Switched Ethernet hubs operating at 10Mbps. This electronic backbone is expected to improve communications within the DOST Bicutan campus, provide faster access to S & T information and support interactive applications such as video-conferencing. The network will provide dedicated high-speed and highly reliable connections among agencies in Bicutan.

Department of Science and Technology (DOST)

2 years P8,625,400 DOST Fund

Strengthening Information Networking

DOST-PCASTRD thru

Nov. 1998-present

PhP9.9M

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in Catanduanes- a GISTNET Pilot Project, Phase II: Setting-up a Fiber Optic System Loop in the Mun. of Virac

Catanduanes State College

Connecting People and Organizations for Rural Dev’t. Through Multi-Purpose Telecenters in Selected Barangays

The project aims to develop and pilot-test an information and communications system in rural communities.

DOST-CARAGA PhP14.0M

Computer Assistance to Selected Schools in CARAGA

The project aims to develop and pilot-test an information and communications system in rural communities.

DOST-CARAGA PhP1.0M

Establishment of an Internet Service Provider in the Province of Nueva Vizcaya

The project aims to provide connectivity services to the provice

DOST II 1997-present PhP0.65M

Science and Technology Information Network and Technical Services (STINTS)

The project has established a PSTC-based rural telecom backbone for sectors that do not have Internet access with Y2K awareness and information technology appreciation activities on the first phase.

DOST XI PhP3.0M

EDUCATION SECTOR Upgrading the IT infrastructure of the Science Education Network for Year 2000 and beyond

The project aims to upgrade the IT facilities of SEI for Y2K compliance as provided for by the law.

DOST-SEI 1999-present PhP1.17M

Strengthening of SEI Electronic Linkages through the Establishment of an Institutional Internet Backbone

The project aims to strengthen and improve the connectivity of SEI to the different network institutions and to the Internet.

DOST-SEI 1999-present PhP0.71M

Establishing a Philippine Database in Science Education

The project aims to collect and systematize data on science education through electronic networking of data such as thesis, dissertations, publications and other research materials. It will put up and develop structures that would allow said information or data to be stored as databases and accessed by different users. A basic feature is to establish linkages among concerned institutions via

DOST-SEI 1995-present PhP0.34M

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computers. Development of Database for S&T Manpower and Science Culture and Strengthening Institutional Capabilities

The project aims to develop databases that will update students, teachers, researchers, policy decision-makers, and other interested individuals on current and future development in S&T education. Several data from the different SEI divisions were identified and will be encoded into the databases to be developed which will be transferred eventually to the SEI website.

DOST-SEI Started 1999 PhP0.16M

Mobile Information Technology Classroom

The project aims to develop an information culture and a technology-literate public preparatory to modernization. It promotes information technology awareness through hands-on computer activities. The MITC is an airconditioned bus equipped with the latest in education technology facilities and interactive instructional/learning materials in science/mathematics. Teacher facilitators were trained to man the MITC.

DOST-CARAGA PhP5.92M

Establishment of a Computer Center at Isabela State University

The project’s aim is to put up a computer center in the northern part of Isabela with the objective of increasing/improving computer literacy of elementary and secondary public school teachers. Modems are provided, thus, the center also serves as an Internet workstation.

DOST II 1997-present PhP0.24M

Establishment of a Computer Center at Nueva Vizcaya General Comprehensive High School

The project’s aim is to put up a computer center in Nueva Vizcaya with the objective of increasing/improving computer literacy of elementary and secondary public school teachers. Modems are provided, thus, the center also serves as an Internet workstation.

DOST II 1997-present PhP0.23M

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DOST-CIT Basic Multimedia Training and Development Center

The project aims to provide a venue to train IT professionals in multimedia production techniques in order to develop a pool of multimedia experts that will lure foreign investors in the IT to invest in the Philippines. The center will also provide a venue for the development of local multimedia products.

DOST VII & CIT 1995-present PhP10.0M

DOST-CIT Computer Software Training and Development Center

The training center serves as a venue to promote the development of the IT industry in the region and to enhance the skills of IT graduates and professionals in software development.

DOST VII & CIT 1994-present PhP2.5M

Upgrading Communication and Information Technology for Education and Sustainable Agro-Industrial Development

To enhance the existing capability of the UPLB in communication and information technology in its vision of making significant contributions to education and sustainable, agro-industrial development in the Philippines and surrounding region. This entails upgrading of communication and information technology hardware. A minor component of the requested grant aid will be building renovation to accommodate staff and facilities to be displaced by the addition of new equipment.

UPLB PhP281.2 M (foreign cost)

FINANCE SECTOR Budget Execution and Accountability Tracking (BEAT) System

Strengthen DBM’s expenditure management capability; streamline budget release procedures and improve front-line service; improve budget administration and accountability; and update budget analysis and decision making.

DBM 5 years PhP400M

Government Purchases Information System (GPIS)

Is a computer based price monitoring system principally intended to facilitate government

Commission on Audit (COA)

Started 1997 (for expansion)

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procurement and discourage overpricing. GPIS basic concept is built on the thesis that procurement is at the same time an economic activity and an administrative process.

Physical Assets Management and Information System (PAMIS)

Formulate Physical Assets Standards and Guidelines; install Physical Assets Administration System; provide a computerized Agency Physical Assets Monitoring System; and develop and install Agency Module on: Inventory Management, Maintenance Management and Executive Information System.

DBM 1 ½ year

GSIS Computerization Project

Phase I (1996) project aims to establish a wide area network (WAN) connecting GSIS’s 27 branches nationwide and to develop and implement the Membership Services and Information System.

Government Service Insurance System (GSIS)

4 years (1999-2002)

Business Recovery Center

Multi-million project aims to “ensure nationwide availability of SSS’ Information Systems should the Main Data Center and/or any of its regional branch hub data centers become inoperative” due to disasters.

Social Security System (SSS)

5 years (1997-2002)

PhP179.2M (Cost for succeeding years is subject to changes)

GOVERNANCE SECTOR Advisory Network for the Government Executive and Legislature (ANGEL)

To establish electronic linkages among the executive and legislative offices involved in Legislative-Executive Development Advisory Council (LEDAC).

NEDA/OP PhP8M

NEDA Information Network Project (NINP)

To improve development planning, investment programming and project monitoring activities in support of the Medium Term Philippine Development Plan (MTPDP) and to a large extent, IT21 through the use of IT resources. The project is divided into three

NEDA PhP63.6M

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(3) major components: 1) Development and Institutionalization of Mission-Critical Information Systems; 2) Establishment of IT Resources (hardware and software) Infrastructure; and 3) IT Manpower Capability Building.

Government Information Systems Plan (GISP) Project

To formulate an Integrated Government Information Systems Strategic Plan for the medium-term which will be called the GISP. The GISP will set the vision and framework for computerization efforts in government over the next 5-6 years. It aims to provide for seamless and more efficient electronic governance, consistent with the goals and objectives of Angat Pinoy 2004 and the National Information Technology Plan for the 21st Century (IT21).

NEDA PhP3.4M DOST Fund

Data and Information Resource Program in Support of Policy Research and Decision Making

The project seeks to create a user-friendly economic database system (EDS) to store and maintain databases from various sources. It is intended to facilitate networking among government and private sector institutions through Data and Information Resource Program (DIRP). With the project, it is envisioned that policymakers and researchers will enjoy easier access to international databases as well as the regular Philippine data series.

PIDS 3 years 1998-present

PhP7.7M

LABOR SECTOR DOLE Computerization Project

Involves the establishment of a wide area network that will link all DOLE offices and the creation of several modules that will run on the network. Also included is the development of a Labor Market Information System

Department of Labor and Employment (DOLE)

3 years (1997-2000)

PhP100M

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(LMIS). MILITARY SECTOR PRC Marine Officers Licensing and Certification System and Networking Project

The project aims to accomplish: 1) Online Transaction Processing and faster service completion time; and 2) Better and Improved Quality of Products and Services. The project intends to benefit not only the marine professionals but also the other professional groups under the supervision and jurisdiction of the Commission. The networking system that will be establish shall ensure a smooth and efficient communication between and among the systems currently existing and being maintained by the Commission.

PRC PhP15.8M

SCIENCE AND TECHNOLOGY SECTOR Strengthening/ Upgrading of FNRI Library Information Database

The project aims to develop a specialized library to meet the research information needs of policy-makers, researchers and other nutrition workers; to promote and coordinate the development of the libraries in the field through trainings/seminars and conferences; encourage the exchange of food and nutrition information within the country, and to maintain links with national and international organizations engaged in food and nutrition services.

DOST-FNRI 1998-present PhP2.54M

Upgrading of FNRI IT Facilities

The objectives of the project are: To improve and standardize the computerization in the Institute including both hardware and software; to adopt and make use of the new trends in software and hardware technology ; to support DOST’s and the government’s program of using IT to improve government processes; and

DOST-FNRI 1998-present PhP2.10M

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to expand the institutes network and improve connection to the internet to prepare the Institute to e-commerce.

Software on Energy Equivalent

The project aims to develop a user-friendly computer software which shows the estimated amount of energy to burn off calories from some food items in excess of requirement and to serve as a guide to implement control of maintenance program.

DOST-FNRI Started 1999 PhP0.22M

Technology Delivery Information and Referral System

The project aims to develop a database on technology transfer activities of the institute and other related information. Activities included are: technology piloting and commercialization, technical assistance/consultation and advisory services, trainings conducted, socio-economics, and technology assessment.

DOST-FPRDI Started 1994 PhP0.50M

FPRDI Publication Abstract Information System

This project involves development of a database on abstract of journals, manuals, books, articles and related literature published by FPRDI.

DOST-FPRDI Started 1995 PhP0.05M

Market Information Generation for FPRDI

This is a database on market information for FPRDI technologies.

DOST-FPRDI Started 1997 PhP0.10M

Philippine Trees Information System

This is a database management system on the properties and characteristics of Philippine trees which have been studied in the institute. These properties include: anatomical, physical, chemical and mechanical properties.

DOST-FPRDI Started 1996 PhP0.10M

Bamboo Information System

This is a database management system on the anatomical, physical, chemical, and mechanical properties and characteristics of bamboo which have been studied in the institute.

DOST-FPRDI Started 1998 PhP0.05M

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Rattan Information System

This is a database management system on the anatomical, physical, chemical, and mechanical properties and characteristics of rattan which have been studied in the institute.

DOST-FPRDI 1998-present PhP0.05M

Metalworking Industry Information Database

The project involves gathering of detailed information on the metalworking industry, specifically the general profile of the firms which include plant capacity, product lines, number of workers, equipment and machinery’s capacity and precision and types of metal working processes employed.

DOST-MIRDC 1999-2004 PhP0.52M

Supplemental Support to the Strengthening of IT Capabilities in Catanduanes

The project aims to develop manpower capabilities in networking and to catalyze R&D activities in the area. It also aims to improve access to information by residents, thereby expanding their opportunities for accelerating economic and social growth.

DOST-PCASTRD thru Catanduanes State College

PhP4.5M

Algebraic Algorithms for Certain CAD/CAM Problems

The project focuses on designing new efficient and infallible algebraic methods for certain problems in CAD/CAM, particularly those related to rational parametric surfaces.

DOST-PCASTRD thru UPD-CS

PhP0.20M

Mango Information Network (MIN)

MIN is a world wide web-based information service, as well as an interactive system geared to expedite the formation of strategic business alliances among small and medium scale (SMEs) and other stakeholders. Six services were made available and accessible through the MIN website.

DOST-PCASTRD

Started in 1996 PhP19.8M

Development of Specialty Database and Internet Resources on Medicinal Plants

The project involves the creation of the e-Health component site on medicinal plants. Information on medicinal

DOST-PCHRD 1998-present Php0.50M

137

plants will be gathered and processed in addition to what is currently available in HERDIN database. The resulting database shall contain information on research , researchers, research organizations, market and business information.

Development of Specialty Database , CD-ROM, and Internet Resources on Malaria

The project aims to develop a one-stop shop information resource on malaria. At present, full-text documents are being scanned into a Hypertext Markup Language (HTML) format. The website that will be developed for this project will contain articles in HTML format and will contain articles, graphics, profiles, statistics, and other relevant information about malaria.

DOST-PCHRD Started in 1996 PhP0.38M

Establishing a National Engineering Information Systems and Services (NEISS) in the Philippines

The project aims to harness I.T. in advancing and promoting the level of learning, awareness and productivity of engineers, students, faculty, researchers, and others involved in research and development. Extending support to the nineteen (19) engineering network schools throughout the country, the project provides access to Engineering Information through the World Wide Web.

DOST-PCIERD Started in 1999 PhP6.93M

Support Operations: Information Services

The project provides for the development of effective information systems for efficient delivery of relevant and timely information that will assist the textiles and garment industries to be on top of new textiles advances and development. Through the systematic collection, organization, storage and retrieval of textiles and textiles related information

DOST-PTRI 1998-present PhP1.92M

138

materials for the development and improvement of the PTRI Technical Library Service, it will assist the researcher in the conduct of their research activities.

Textile Information Management and Awareness Service

The dissemination of up-to-date information on the textile processes, raw materials, products technology, and developments and fashion trends will continuously help the textile and garment manufacturers in improving the quality of their production.

DOST-PTRI 1999-present PhP2.19M

Information Packaging The project involves the production of regular STII publication, The Philippine Journal of Science in electronic version.

DOST-STII (under agency budget)

Establishment of Philippine Database in Science Education (ECOTECH LINK)

ECOTECH LINK is a meta-database or organized and exhaustive pointer database that includes brief descriptions of different organizations carrying technology and economic information and links to other groups carrying related information.

DOST-STII (under agency budget)

S&T Info Web The S&T Info Web is a virtual system which connects the institute to the entire DOST system and to the rest of the world. Created in 1997 and made available on-line in 1998, the S&T Info Web is home to ten databases, six publications and eight home pages. As of July 1999, the S&T Web has been accessed 206,166 times by various internet searchers and surfers.

DOST-STII (under agency budget)

Establishment of Cagayan Valley Information Network

This project is conceived to provide the public relevant and updated information about Region II

DOST II Started 1999 PhP0.10M

Operation of the Regional Metals and Engineering Service Centers

The project aims to establish a center for the production of highly precisioned metal products

DOST VII 1998-2004 PhP12.0M

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using CNC technologies. Establishment of Cebu Design Engineering Center

The project aims to provide a center for the development of machine design engineers and product design capabilities using CAD/CAM/CAE technologies.

DOST VII 1999-2004 PhP2.0M

Data Acquisition Training and Development Center CITE, San Jose, Talamban, Cebu

The project aims to provide a center which will develop local capabilities in automated manufacturing for enhancing product quality and productivity of SMEs in Central Visayas

DOST VII 1996-present PhP1.25M

TOURISM SECTOR DFA Machine Readable Passports and Visas (MRP/V) Project

The project aims to streamline and modernize the issuance process, introduce security features in passports and visas and ensure compliance with the international standards on travel documents. The system will also create a database where all applicant information will be stored for easy access, and feature an interface that will allow the department to streamline verification procedures with other government agencies.

Department of Foreign Affairs (DFA)

10 years P2 Billion Under BOT scheme

TRADE SECTOR Philippine Trade and Investment Network System (PhilTINS)

A locally funded project, PhilTINS is a computerized “one-stop system” linked to DTI’s regional and overseas offices and trade associations for the storage and retrieval of timely information on trade and investment. This central facility will lessen the man-hours needed for research and make DTI services more accessible to the public, boosting eventually exports and investment.

Department of Trade and Industry (DTI/BETP)

1999-Preparatory 2000-System Development

PhP18.9M

TRANSPORTATION SECTOR LTO Information Technology (Build-Own-Operate) Project

The project is in line with the IT21 which calls for intensive diffusion and use of IT in government operations. The project

LTO/DOTC 10 years US$49.7B or PhP1.988Trillion ($1=PhP40)

140

involves the development, operation and maintenance of an integrated IT system by way of the BOO scheme over a concession period of 10 years in accordance with R.A. 7718, the Amended BOT Law. The project will interconnect LTO's more than 200 offices nationwide, enable on-line transaction processing and integrate critical processes.

Source:http://www.neda.gov.ph

141

ANNEX A-2 - PROPOSED GOVERNMENT ICT PROJECTS AGRICULTURE/AGRARIAN SECTOR Nationwide Information Network for the Department of Agriculture

The project supports the implementation of RA 8435 which is known as the Agriculture and Fisheries Modernization Act (AFMA) of the DA. The goal is to make available to the people the basic agricultural data or community information in the country.

The project is composed of three areas of endeavor, namely: information systems/data requirements, connectivity requirements and the organizational requirements.

DA/NCC Four years

PhP2.9B

COMMUNICATION SECTOR

Computerization Program

Involves local area networking of offices as well as upgrading of existing PCs and eventual linkage to the Internet (including establishment of a web page).

House of Representatives

1 year PhP75 - PhP80M

Creation of Regional Information Resource Centers (RIRC) Nationwide

This project is geared towards the eventual interconnection and mainstreaming of all the local government units (LGUs) to the existing internet technology. It is presented in three phases to maximize the existing technologies using the most efficient and effective strategies. The first phase will include selected provinces and cities with existing ISP connections; the second phase include all remaining provinces and cities and adopting a mixed-technology approach

NCC Four years

PhP250M

142

and the last phase will involve all municipalities and adopting a more varied technology mix as the geographical location will require.

Breaking Geographical Barriers and Enhancing Local Governance through Information Technology (IT)

This project is composed of five (5) modules each can be implemented individually. However, it would be best to implement all these 5 projects to selected local government units for easy monitoring and assessment of its possible contribution to the overall economic status of the chosen LGU.

This proposal will use RPWeb as its backbone. The essence of development is focused on the interconnection among LGUs and NGAs. However, to fully support operation, NCC proposes to supply the required infrastructure, which is composed of data/information, manpower requirement, policies and plans.

NCC

EDUCATION SECTOR

Computer Networking of State Colleges and Universities

The proposed plan of the Philippine Association of State Universities and Colleges (PASUC) is to interconnect the 109 State Universities and Colleges (SUC). The project aims to interconnect its operations with the support of computer networks, Local Area Network (LAN) and Wide Area Network (WAN). Every institution will have a basic LAN, which will be installed, in the library to automate information transaction and to provide

CHED/NCC

Three years

PhP1.56B

143

facility for communication locally to improve the administration in the institutions. These will be interconnected to provide regional and nationwide area networks. Connectivity with the INTERNET will be incorporated in the system so that information can be shared by all SUCs and provide vital information to major agents of progress, both local and foreign.

Equipment for the Mobile Information Technology Classroom

The project is for the pre-production of the MITC units. Equipment/facility will be purchased as basis for the measurement dimensions of computer tables, storage facilities, notebook computers, multimedia projector , projector screen, and generator in the three (3) MITC units.

DOST-SEI

PhP1.12M

Development and Replication of Computer-based Teaching (CBT) Modules on Selected Topics in Biology, Chemistry, Mathematics and Physics

The project aims to provide 110 S&T-oriented high schools and RSTCs with computer-based teaching modules on selected topics in biology, chemistry, mathematics and physics.

DOST-SEI

PhP1.12M

Operation of Mobile IT Literacy Program

The project is aimed at providing pupils and students from remote areas access to computers.

DOST VII PhP4.0M

IT Training Program for the Disabled and Vulnerable

The project aims to introduce a program that will provide opportunities for the disabled and vulnerable.

DOST VII

GOVERNANCE SECTOR

Cooperation Agreement: DBM Systems Development Support

The project was established to improve the systems that support the delivery and services of programs under DBM’s Mandate. One of the services provided to

DBM

(proposed

Cdn$265T

144

Support

Sub Project: Procurement System Design Project

services provided to government agencies by DBM is procurement, through the Bureau of Procurement Services (BPS).

A SubProject grant will provide the services of experts who will conduct a policy review and assessment of the Philippines as a Regional Center for Shared Services.

through CIDA PTTAF)

Enhancement of DOST VII Intranet System

The project is proposed to improve Region VII’s existing networking infrastructure to be able to render better quality service to its clientele.

DOST VII PhP0.65M

Improvement of Poverty Alleviation thru Speedy Access of Modern Age Services & Assistance (IPA-SA-MASA)

This project aims to develop an inter-agency integrated monitoring and management information system that will harmonize the mandate, plans and programs of the different offices task to alleviate the poverty condition of the country. This system be the vehicle to inform on the different projects being undertaken by the different line and attached agencies.

NCC PhP60.0M

G-Wish The Project is a nationwide infrastructure envisioned to support the decentralization of operations of the government and to share information between and among government agencies and the public. It is made up of Information Providers, Public Information Service Points and government field units interconnected by a common nationwide network. It consists of several network hubs composed of hardware and software devices containing multiple independent but

NCC Three years

PhP580.5M

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connected modules if the network and internetworking equipment. These will be located in the different regions and provinces.

Cooperation Agreement: PSS Service Improvement and Data Accessibility Program

Sub Project: PSS Training on Data Analysis and Report Writing

The project aims to improve the capability of the five statistical agencies under PSS in data analysis and report writing. The five statistical agencies were the: NSCB, NSO, SRTC, BAS and BLES.

NSCB

(proposed through PTTAF)

Cdn$115T

Civil Registry System (CRS) Improvement Project

CRS Project covers the development of an Information Technology (IT) Solution for the Civil Registry System through a Build-Transfer-Operate (BTO) acquisition scheme as provided for by RA No. 7718 (BOT Law) that aims to: (a) enhance and improve public service delivery; (b) efficiently organize, manage and maintain a complete and accurate database of civil registry documents and information; (c) overcome attempts on falsification and fabrication of civil registry documents; (d) enhance the computing capability of the NSO; and (e) provide for the establishment and perpetuation of a unique individual-referencing Population Reference Number (PRN).

National Statistics Office (NSO)

(subject to Malacanang’s approval)

84 mos. PhP318.11M

LABOR SECTOR

Pinoy Watch “Pinoy Watch” is a database of all Filipinos working abroad. This project will integrate and

NCC One Year PhP10.0M

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harmonize the databases created by similar agencies and non- government organizations. The database will capture all Filipinos who leave with a working permit as well as those with a tourist visa permit.

MILITARY SECTOR

Automated Fingerprint Identification System Project

Project aims to develop and operationalize a state-of-the-art, fully-scalable Automated Fingerprint Identification System (AFIS) solution that will have the following features: a) reliable, user-friendly, flexible, modular; b) high degree of accuracy; c) combines high quality image-scanning with fast image processing; d) possess the capability to interface with other AFIS or forensic systems; and e) successful worldwide track record, e.g. Federal Bureau of Investigation.

National Bureau of Investigation (NBI)

PhP87.4M

SCIENCE AND TECHNOLOGY SECTOR

Design and Development of a Standalone MPEG Audio Decoder

This project aims to develop a prototype of a standalone MPEG audio decoder and its supporting hardware and software from the host PC side. In pursuit of this goal, research on modem perceptual audio encoding techniques will be done and standard audio encoding and decoding algorithms will be implemented on embedded hardware.

DOST-ASTI

PhP3.96M

Asynchronous Transfer Mode (ATM) Project

ATM is a technology that will have a significant impact in the areas of

DOST-ASTI

PhP3.96M

147

networking, data communications, and telecommunications. It has the potential to hasten the convergence of data, voice, and video into a unified transport mechanism/protocol.

Establishment of IT Zone Park in the Central Visayas in Cooperation with Local Export Zone

The project aims to establish an IT park where local and foreign IT companies invest in IT industry and maybe jointly undertake IT innovations of developing new products and services.

DOST VII PhP50.0M

TRADE SECTOR

Virtual Centers for Technology Innovation (VCTIs)

A component of the DOSTs project COMPETE (Comprehensive Program to Enhance Technology Enterprises), the establishment of VCTIs was proposed with the idea of giving small and medium-sized companies (SMEs) in the country the opportunity to develop a competitive advantage in export markets.

DOST-ASTI

UP-Dept. of Electronics and Elect. Eng.

4 years

Source:http://www.neda.gov.ph

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Appendix D Government Information Systems Plan

MALACAÑANGMANILA

BY THE PRESIDENT

EXECUTIVE ORDER NO. 265

APPROVING AND ADOPTING THE GOVERNMENT INFORMATION SYSTEMS PLAN (GISP) AS FRAMEWORK AND GUIDE FOR ALL COMPUTERIZATION EFFORTS IN GOVERNMENT

WHEREAS, the government is committed to carry out, in pursuance of “Angat Pinoy 2004”, or the Medium-Term Philippine Development Plan, 1999-2004, wide-ranging administrative reforms to enhance government efficiency and effectiveness in government operations and in the delivery of basic services to the public;

WHEREAS, these reforms are being pursued particularly in fiscal and financial management, procurement, education and manpower development, personnel welfare, organizational effectiveness, and service delivery;

WHEREAS, the wider use and application of information and communications technology offer tremendous opportunities for government to ensure the success of these reforms;

WHEREAS, the National Information Technology Council (NITC), the policy advisory body on information and communications technology in the country, has formulated, in close consultation with concerned government agencies, the private sector, local government units, academe, and members of Congress, and accordingly endorsed a government information systems plan that will serve as blueprint for the computerization of vital government operations and key front-line services for more effective governance;

WHEREAS, the NITC and the Electronic Commerce Promotion Council, created pursuant to Executive Order 468, dated 23 February 1998, have been merged into the Information Technology and Electronic Commerce Council (ITECC);

NOW , THEREFORE, I, JOSEPH EJERCITO ESTRADA, President of the Philippines, by virtue of the powers vested in me by law, do hereby order as follows:

Section 1. Approval of the GISP. The Government Information Systems Plan (GISP), also to be known as “Philippine Government Online” hereto

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attached, is hereby approved and adopted as framework and guide for the computerization of key frontline and common services and operations of the government to enhance overall governance and improve the efficiency and effectiveness of the bureaucracy.

Section 2. GISP Implementation. To ensure the full and effective implementation of the GISP, all government agencies and instrumentalities, including local government units, shall align their respective computerization projects with the priorities identified in the GISP. The ITECC shall prepare a consolidated annual program of expenditures for government computerization, which shall become part of the President’s Annual Expenditure Program for submission to Congress.

Section 3. Implementing Rules and Regulations. ITECC shall issue such guidelines as may be necessary to implement this Executive Order.

Section 4. Repealing Clause. All orders, directives, issuances, resolutions, rules and regulations or parts thereof that are inconsistent with the provisions of this Executive Order are hereby repealed or modified accordingly.

Section 5. Effectivity. This Executive Order shall take effect immediately.

DONE in the City of Manila this 12th day of July, in the year of our Lord Two Thousand.

JOSEPH EJERCITO ESTRADA

President of the Philippines

By the President:

RONALDO B. ZAMORA Executive Secretary

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Appendix E Market studies on specific countries in Asia-Pacific

Demand conditions Industry Structure Factor conditions THAILAND Market Statistics (millions of US$) Business Services in Thailand: 1997 1998 1999 2000* A. Total Market Size: 670 800 920 1050 B. Total Local Production: 268 320 368 450 C. Total Exports: 7 8 9 30 D. Total Imports: 408 488 561 630 E. Total Imports from U.S. 204 244 280 360 *estimate Notes: The above statistics are unofficial estimates, Business services include accounting, legal, management consulting and advertising services Exchange rate: US $1 = 37 Baht

Market leaders in management consulting are already present in Thailand. These are :Andersen Consulting, Boston Consulting Group Price Waterhouse, Demand is expected to remain particularly high for expertise in financial restructuring related activities, mergers and acquisitions, debt collection, and due diligence work.

Reflecting the need for finance related advisory services, a new committee was set up by the Bank of Thailand and already lists 98 financial advisors doing restructuring work through that committee. The Royal Thai Government should continue to push the recapitalization of the financial sector and privatization of many state-owned enterprises. Standard & Poors estimates that the financial sector alone needs over $30 billion in new capital, and under $10 billion has been raised so far. In addition, potential privatization candidates for divestiture are state-held transportation, telecommunications, and energy enterprises.

CHINA China's management consulting industry essentially took off in 1996. The market has since then expanded from almost zero to over one billion dollars in revenue. The industry's growth rate surpasses 200 percent each year.

More than 100,000 companies are active in the Chinese consulting market of which 65 percent of them are foreign firms with over 85 percent of total revenues. Some of these foreign firms have dramatically expanded their number of employees from just a handful of consultants to more than a hundred. Their clients now also include large Chinese companies. China's management

Premier Zhu Rongji highlighted China's ambition to develop a modern management consulting profession during his visit to the Massachusetts Institute of Technology in 1998. Although some parts of the Chinese government and many state-owned enterprises (SOEs) still view the emerging management consulting industry with skepticism, more and more Chinese have come to accept the fact that China

151

Demand conditions Industry Structure Factor conditions consulting firms come in a variety of forms. In addition to the traditional management consulting firm, financial advisories, brokerages, universities and even research arms of ministries offer extensive consulting services. Many of today's domestic management consulting firms have grown out of these unconventional types of organizations. China's management consulting sector is bereft of a clear regulatory structure. Both licensed and unlicensed firms compete in the market. In the late 1980s, four foreign consulting companies were granted licenses from the State Council with the backing of Zhu Rongji, then Mayor of Shanghai. The four companies -- BCG, Arthur Andersen, China Consulting Association and the Hong Kong Lei-Da Group – are still the only foreign consulting firms with official licenses. The only difference between them and their unlicensed competitors is that they have certain tax advantages. The three-tier market structure evident in many other industries is also applicable to China's management consulting sector. The high end segment is dominated by foreign consulting firms with about 20-30 percent of the market. These firms focus on serving multinational and large domestic clients. The second layer is composed of joint ventures and Chinese companies with significant foreign background (such as graduates from overseas schools or former consultants at foreign companies). They

needs world class management experience to transform its moribund state sector and integrate it into the world economy. In the near term, tremendous opportunities for consulting firms will arise from SOE reforms, financial system restructuring, and the expanded use of information technology. The implications of accession to the World Trade Organization (WTO) for China's management consulting industry would be two-fold. First, foreign management consulting companies that now operate with representative offices could gain official status to engage in a broader scope of business. Second, and more importantly, WTO entry could speed up the restructuring of the nation's industries, which will need advice on how to adapt to change. A more open environment spurred by WTO accession could also foster greater acceptance of foreign management consulting. Information technology consulting is becoming increasingly important. The decision in August 1999 by the Communist Party and the State Council to support fledging high-tech industries, which will also benefit consulting firms, has been followed by a series of material incentives: o Business tax would be waived on income from technological transfers, technological development and related technological consultancy and services. o Priority would be given to the companies to list on both

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Demand conditions Industry Structure Factor conditions tend to have a wider client base because of their intimate local knowledge and more competitive prices. Their market share is expected to grow from one-third to half in the near future. At the bottom is the home-grown consulting companies that are meeting the mounting domestic requirements for management consulting during China's economic transition. Over the long term, the third group of companies could only survive by converging with the second and transform the competitive landscape into multinational vs. domestic-foreign alliance. The combination of China's particular culture and extensive planned economy has meant that many of the principles developed in the west have to be modified before they can be applied to the local environment. In particular, the following factors must be considered: o Strategy implementation -- Domestic clients are still ill-prepared to absorb the types of sophisticated structural changes commonly proscribed by consulting firms in the west. They often seek strategies that can be implemented without great difficulty. If changes work against SOE leaders, they will often resist any ideas proposed by consulting firms. Sometimes these leaders are not at all interested in change as their average tenure is only three to five years. o Project scope -- Local clients have a tendency to address and ever widening spectrum of problems as projects move ahead and, therefore, easily expand the scope of a project. This has to be managed

domestic and overseas markets. Secondary boards for high-tech firms would be set up on the Shanghai and Shenzhen stock exchanges once conditions are ripe. o Risk funds and venture-capital development companies for high-tech industries would be established to help finance start-up operations.

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Demand conditions Industry Structure Factor conditions carefully to keep the project within budget. o Policy initiatives -- Many of the regulations directed at other industries can have a significant impact on the management consulting sector. For example, a recently released regulation restricting market research by foreign companies could substantially disadvantage foreign consulting firms operating in China. Market Trends Organizational change and performance improvement is needed throughout China's economy. The three top sectors on the reform agenda of China's leadership are finance, information technology/telecommunications and health care/pharmaceuticals. These are the same areas with the fastest growing demands for consulting services. Strategy and marketing services are the most needed, followed by organization consulting and industry/economic analysis. Many multinationals used consultants to help enter the market, seeking advice on joint-venture formation, partner identification, market assessment and risk analysis. These companies now look to improve overall operations and business processes, focusing on more traditional consulting services such as systems integration, business-process re-engineering, strategy formation and implementation, and supply-chain management. For domestic companies that are seeking outside consulting services, they are more

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Demand conditions Industry Structure Factor conditions interested in the role of information technology and business strategy formulation. These companies are usually large and profitable state-owned enterprises or fast-expanding private companies. Although state-owned enterprises have started reaching out for consulting services, most of them still drag their feet as few of them are making money and various limitations prevent them from fully implementing any proposed structural changes. Industry analysts estimate that domestic companies listed on the stock market will need the most management consulting services in the future. While the overall management consulting industry in China is undergoing significant change, the clients' needs are also changing as their operations evolve. Among multinational clients the focus is shifting from entry level strategy consulting to growth and operations strategy. For domestic clients, there is a shift from technical and engineering consulting to management consulting. With continuing economic reform, consulting services on mergers and acquisitions as well as joint-venture dissolution and formation will be on the rise. Another area of change in the management-consulting market is the appearance of domestic competitors, especially in the areas of IT consulting and systems integration. New local players are competing largely on the basis of price and , because of their intimate knowledge of the mainland business environment, they seem to

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Demand conditions Industry Structure Factor conditions have an added advantage over many foreign firms. Therefore, partnering with local firms could become a trend as the consulting market develops. For consulting companies on a lookout for opportunities in China, the development in China's management consulting sector has demonstrated several key success factors. Consultants must select the right types of clients. Targeting domestic enterprises and government organizations as the primary market has, in general, not been successful, leading many firms to return to their multinational clients. This has made competition in the high-end market intense and has left fewer opportunities for newcomers to be successful. Therefore, new-to-market firms are best advised to incorporate local clients in their expansion plan in the early stage and start partnering with local consulting firms. It is crucial to develop a good rapport with key central and local government officials and business community leaders. This takes time. Localizing services may assist in such outreach efforts. Hiring local graduates and experienced managers may also increase profitability because local salaries are significantly lower than expatriate pay packages. Value should be delivered quickly and decisively, using global best practices. The price of the service has to also be price-sensitive. Chinese business people are becoming increasingly savvy and are aware of what to expect from

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Demand conditions Industry Structure Factor conditions management consulting and at what price. Finally, foreign management consulting firms have to be able to meet the unique demands of Chinese clients arising from their particular local environment. Management consulting that can deliver locally tailored solutions sensitive to local culture, political dynamics and the legacy of socialist economics will be in the best position to gain a following in the marketplace.

LAOS Growth of private investment and commerce will necessarily generate increasing demand for banking, insurance, accounting, communciations, and consulting services. In 1998, the services sector grew by 4.8%, and now constitutes more than 25% of GDP.

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Appendix F Market studies on specific countries in Europe

Demand conditions Industry Structure Factor conditions GERMANY Management Consulting is one of the most thriving service sectors in Germany. The total market continues to grow by more than ten percent per year and does not show any sign of stagnation or decrease in Germany. To obtain reliable statistical is extremely difficult. 1998 1999 2000* A)Total sales 10,650 12,680 13,950 B) Sales by local firms 5,440 5,990 6,200 C) Sales by foreign-owned firms 5,440 5,980 6,200 E) Sales by U.S.-owned firms 4,560 4,700 5,000 *estimate

Estimates report that there are almost 10,000 one-man/woman operations, which, account for a very small fraction of the total market in terms of billings. Today, clients of management consultants typically integrated solutions from their consultants.. Increased internationalization and technical developments almost guarantee further growth potential. Andersen Consulting Unternehmensberatung GmbH Andersen Consulting's turnover for Germany and Austria amounted to DM804 million in 1998, representing an increase of 23.5% on the previous year. The company employs a workforce of 44,000 worldwide in 137 offices in 46 countries. Worldwide turnover for Andersen totaled US$8.3 billion in 1998, up around 25% for the third consecutive year. The company offers a range of consulting services divided in four branches: strategy, change management, business process management and technology. The technology side of business is becoming more and more important to Andersen Consulting.

Further expansion of the sector is obstructed by a severe lack of qualified personnel.

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Demand conditions Industry Structure Factor conditions The company recently teamed up with the world's largest ERP-provider SAP in order to improve the service in this area. The German branch of the international consulting company was formed in 1989 and has 5 offices employing 1100 people. Source: Euromonitor

ITALY

The Italian market for management consulting was estimated at USD 1.8 billion in 1999 (excluding earnings additional to fee income, such as revenues from outsourcing activities, software licenses, etc.). Consulting is having an unprecedented period of growth in Italy, with yearly increases of 15% or more. Corporate strategy consulting accounts for about 40% of total fee revenues (with strategic planning and organization development totaling 15% and 13% respectively). Information technology consulting follows with 32% of total revenues (with "pure" IT consulting totaling 13% and IT systems development/integration 16%). Operations management and human resources consulting total respectively 20% and 8% of total revenues. In 1999, the manufacturing sector was the biggest purchaser of management consulting services (32%), followed by the banking and insurance sectors (29%), the communication and transportation sectors (19%), and the central & local

The market in Italy is comprised of about 800 firms with 22,000 people, and is divided among global competitors (most of which are of U.S. origin) offering a full-range of state-of-the-art products, a few "national champions", and a number of local or niche players and "gurus". Concentration is high, with the top 20 firms making up about 40% of overall fee revenues. Multinational firms are said to make up as much as 60% of the market. Most big multinational consulting firms are well established in the Italian market. The largest consulting firm in Italy is Andersen Consulting, which recorded sales in excess of USD 370 million in 1999 and employs over 3,000 people. In addition to consulting, Andersen Consulting (like other important consulting firms) provides solutions and technology in the area of information services, as well as outsourcing services in the area of administration and financial control. The top Italian firms include Consiel,

Issues such as e-business, implementation of ERP systems, globalization/internationalization, mergers and acquisitions are said to be key drivers for management consulting services in the near future. Both private and public organizations offer opportunities. Public service companies and government agencies are slowly but steadily re-organizing and reviewing their operations to achieve higher efficiency. In particular, utility companies -- which used to hold monopoly positions in the telecommunications, energy, and transportation sectors -- are now faced with challenging liberalization and privatization processes. A solid knowledge of the local regulatory environment and market conditions, as well as unique know how in specialized sectors/functions and adequate international experience have become pre-conditions for effectively competing in this market. American consulting firms considering entering the Italian

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Demand conditions Industry Structure Factor conditions governments (8). (USD Millions) 1998 1999 2000* Total Market Size 1,580 1,750 1,850 Sales by Local Firms 700 770 815 Exports by Local Firms 60 70 75 Sales by Foreign-owned Firms 940 1,050 1,110 Sales by U.S.-owned Firms 660 740 780 Exchange rate used: 1737 1818 2000 The above statistics are unofficial estimates.

Praxi, Soges, Elea, Monitor, Value Partners, and GEA.

market should therefore explore the possibility of teaming up with Italian partners.

SWITZERLAND Hardly another market is booming as much as consulting. In Switzerland the business consultants book a yearly growth of around 15%. In 1999, Swiss companies spent around $1.5 billion for business consulting In their statutes, Consultants are often hired for problems and challenges that companies cannot do or do not want to direct themselves: personnel search and recruitment (58%), legal advice (44%), software development and implementation projects (42%), strategic questions (40%). In the age of global change there is a high demand and continuous need for management and business consultants. More and more consultants want to join this race and open new offices in Switzerland

. The consultant density in Switzerland - the number of consultants per one million inhabitants - is the highest worldwide. From 1984 until 1998, the total number increased 65% to reach a total of 2,700 consultants. Consultants are a power segment in the Swiss economy. Regionally the consulting business tends to concentrate in the economic metropoles: around 60% in and around Zurich, the rest in Geneva, Bern, Basel, Luzern and St. Gallen. Asco (Swiss association of business consultants) defines business consulting as follows: Business consulting is a project related interaction process between people of a client system and people of a consulting system. The consulting system is independent, helps professionally, viewing a problem in its entirety, to optimize the success potential of the client system. Classical business consulting is not a standardized service, but a custom tailored solution and

Globalization and deregulation challenge management more and more. To a modern economy based on division of labor, it is not unusual to search for services (which one does not have in house) from outside. The upcoming e-business, with its associated structural changes, will also give added impetus to consultants. Broad general knowledge of the economy and present management methods as well as life experience and knowledge of human nature are success factors in this business. Successful consultants not only have expert competence but also the capacity of understanding and sensibility, excellent communication skills and independence in judgement. Structural changes with the upcoming e-business, System Based Marketing and IT solutions call for diversified consulting teams consisting of company and technology developers, strategists, marketing specialists,

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Demand conditions Industry Structure Factor conditions the consultant can only help and support. The translation into action of the measures has to be executed to a great extent by the client himself who is also responsible for it. The competition on the Swiss market is accordingly fierce. The internationally leading consulting companies also have a firm base in Switzerland and they occupy the first six ranks in terms of turnover. In Switzerland there is free competition in the consulting business and therefore the range of fees is wide. The consulting fee system differs between daily fees and success fees, which are paid after successful implementation. The pressure from clients oriented towards a fee system depending on success. Top consultants enjoy yearly fee turnovers of over $640,000; the absolute top can amount to $1,120,000 and more. Such returns are obtained by the "stars" of single consultants, smaller consultant companies, so-called "boutiques" (highly specialized) as well as by the giants from the premium segment of the big international consulting companies. Also auditors, who more and more are advancing into the business segment of consulting, can book considerable rates. Business Consultants Fee turnover 1998 McKinsey Pricewaterhouse Coopers $120-160 million Andersen Consulting ATAG Ernst&Young CSC Ploenske $48-118 million The Boston Consulting Group

information specialists, etc. These specialists have often to be hired from the USA, Germany and Far East. Fast and more precise results concerning effectiveness of marketing measures and client care thanks to data warehouses, data mining, internet/intranet or call centers are demanded. The information field seems to have the best growth potential for new entrants in the consulting branch. A new trend is also becoming evident in the knowledge management consulting. Important world organizations, governments and world enterprises count on this expertise. Since Switzerland is home to many such organizations and entities, the potential is significant.

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Demand conditions Industry Structure Factor conditions KPMG Arthur Andersen Arthur D. Little Bain & Company $24-46 million St. Gallen Consulting Group The business consulting branch is very complex. From monolithic consulting companies they have developed to specialty networks in order to be able to cover the range of requests completely. They offer a wide range of services and support their clients in all questions concerning strategy, organization and often also in special fields like logistics or technical problems. Also the small and middle-sized companies distinguish themselves with attractive specialties in this complex environment. Their focus is more on particular fields such as company culture, corporate identity, brand building, and technology and innovation management. Consultants enjoy high acceptance in Switzerland. On many "executive floors" the consultants are considered indispensable, continual helpers, available on call. All the big companies work with consultants. Also small and middle-sized companies trust in consultants and regularly engage one or more consulting companies to assure the success of their enterprises. The consultants are expected to have the latest knowledge which they bring to bear to analyze and handle problems. They are also able to benefit from the realization of other company projects. They have the time to go into

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Demand conditions Industry Structure Factor conditions details, which the own company people do not have. Big companies often work with international top consultant companies and highly specialized consultants. Small and middle-sized companies tend more to small owner managed consulting companies where they have the possibility to negotiate directly with the owner in order to work out fast and pragmatic solutions.

UNITED KINGDOM 70% of Britain's $1.21 trillion annual GDP is now generated by services. Transportation, telecommunications, finance, and insurance are the best-known sectors, dominated by big business and established companies. These important sectors and the leading companies within them have proved to be flexible and innovative, responding quickly to market conditions and regulatory change, but tending to exclude small and medium-sized firms. The most productive of those professional and technical services sectors are architecture and design, advertising and publicity, management consulting, research and development, and international legal and accounting services. U.S. professional services companies generate annual fees of approximately $13.5 billion from the U.K. With insight into market conditions, means of access, and potential for exports, U.S. firms have already achieved a significant

Total advertising spendings in the UK management consultancy market amounted to £5.3 million in 1998, an increase of 19% on the previous year. The majority of advertising (74%) is channeled through the press, in particular trade journals, reflecting its status as a business to business service. The other significant advertising channels are television, radio and outdoors adverts accounting for 20%, 5% and 1% of the total adspend respectively. The most prolific advertiser was Business Link, which accounted for over 37% of the total adspend. Business Link is sponsored by the Department of Trade and Industry and is organized by local government to provide business counseling and management consulting to local industry. Andersen Consulting maintained a high profile in

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Demand conditions Industry Structure Factor conditions market share. Market Data ($ billions) 1997 1998 1999(est) A) Total Market Size 875 880 885 B) Locally Billed Services*

892 892 895 C) Total Services Exports

383 385 389 D) Total Services Imports 366 373 379 * It is not possible to differentiate the services billed by majority-owned affiliates of U.S. firms established in Britain from those of British-owned firms.

1998, predominantly through television advertising, and in 1998 its budget was 9% higher than in 1997. KPMG UK KPMG produced its best fee performance for a decade in 1998, with gross fees up 19.4% since 1997 at £867 million. It was also a profitable year with net profit up by 20.6% since 1997 at £179 million in 1998. Its performance in management consulting spearheaded the firm's growth as fees rose by 51% to £216.9 million. In December 1998 the UK chiefs of KPMG said they were considering floating a portion of their fast-growing consulting business. Calling off the merger with Ernst & Young had a limited effect on the company, as few people as necessary were involved in the merger talks. Around two-fifths of KPMG's income came from auditing and accountancy, with a further 21% from tax, 17% from management consultancy, 22% from corporate finance and insolvency services. Cap Gemini Group Turnover increased by 28.6% since 1997 to FF25.9 billion in 1998. Net profit in 1998 amounted to FF1.2 billion, an increase of

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Demand conditions Industry Structure Factor conditions 62% on the previous year. The Cap Gemini Group is established in two core businesses: information technology services and management consulting which it provides through its subsidiary, Gemini Consulting. The company has recently gained a £600 million contract with Carlton Television to run their IT systems, monitoring annual sales of television advertising. Outsourcing services include applications management, distributed computer services, central computer services, network management systems and business process management.

BULGARIA Investors in Bulgaria need the services of consultants to help them with market entry. In addition, small and medium sized Bulgarian companies unfamiliar with how to prepare a business plan to attract investors or obtain a loan need consulting services to help them. They also need assistance from consultants in doing research to help them find and acquire new and used machinery.

Source:http://www.usatrade.gov/ccg

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Appendix G Market study on the United States

Demand conditions Industry Structure Factor conditions UNITED STATES Management consulting was the largest sector in the Accounting, Auditing and Bookkeeping market in 1998 with a value of US$35.4 billion. As auditors face decreasing demand for their traditional tax and auditing services, high margin consulting services assumed a greater role in the market. Reflecting this trend, the management consulting sector Grew 105% over the review period, from 40% of market value In 1994 to 47.5% in 1998. US$ million sectors 1994 1998 Management Consulting 17,223.6 35,360.9 Source: Euromonitor Management consulting is expected to account for 56.1% of the market in 2003, growing

Accounting, Auditing and bookeeping sector As the management consulting sector begins to mature, companies are expected to begin differentiating their services along those practices in which they have a competitive advantage. Consulting divisions should become more specialized to particular client needs as this trend develops. To be competitive CPAs are shifting their focus toward helping clients understand all areas of business performance rather than financial matters alone. This trend is expected to continue. Management, marketing and Consulting services sector As numerous consulting firms experienced difficulty finding skilled worker during the review period, extensive employee

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Demand conditions Industry Structure Factor conditions 92.5% in current terms from 1998 to a value of US$72.5 billion. SECTOR FORECASTS 1999-2003 US$ million sectors 1999 2003 Management Consulting 42,000.0 72,500.0 Source: Euromonitor In the same manner, the strategic management consulting sector was the largest during the review period, accounting for 54% of total management and marketing consulting services market revenues in 1998. Management consulting revenues grew 84% from 1994 to a value of US$29.3 billion in 1998, with companies increasingly seeking professional advice regarding international expansion and internal restructuring strategies. Fueled by rapid technological advancements, the computer and software consulting sector was the most dynamic during the review period, increasing 146.9% from 1994 to a value of US$ 7.8 billion in 1998. The tax consulting sector was the least dynamic during the review period, decreasing 17.1% from 1994 to a value of US$868.9 million in 1998, with companies increasingly handling such matters internally. Accounting for 13% of total management and marketing Consulting revenues, the public relations consulting

training programs became an integral part of the development strategies of key players. Numerous management consulting firms improved employee compensation packages, shared governing power, and combined and redefined jobs in an effort to ameliorate employee relations between 1994 and 1998. Key players relied on technological advancements to enhance their quality of service and more effectively meet the needs of their clients during the review period. Major management consulting firms increased global operation activity during the review period as they continued to provide service to internationally-expanded clients. Many key players sought to become comprehensive, seamless professional advisory organizations during the review period, offering consulting services in conjunction with professional services, such as accounting. CORPORATE OVERVIEW 1998 Companies avg. sales growth market share Andersen Consulting 23.6 12.2 PricewaterhouseCoopers 2.0 8.0 Deloitte Touche Tohmatsu Internat

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Demand conditions Industry Structure Factor conditions sector increased 38.7% from 1994 to a value of US$7.1 billion in 1998. 1994-1998 US$ million 1994 1998 Management consulting 15,862.0 29,326.8 Computer and software 3,145.0 7,766.2 Public relations 5,091.0 7,060.2 Other consulting and design 3,459.0 6,136.9 Engineering and design 2,444.0 3,149.9 Tax 1,048.0 868.9 Source: Euromonitor The strategic management consulting sector is expected to continue to be the largest during the forecast period, accounting for 54.4% of total US management and marketing consulting revenues by 2003. Strategic management consulting revenues are forecast to increase 64.8% between 1999 and 2003 to a value of US$54.8 billion. The sector will benefit as firms seek corporate restructuring advice in an effort to improve profit margins in highly competitive market environments. Rapid technological

12.6 6.7 Ernst & Young International 18.2 6.7 KPMG International 5.3 4.8 Source: Euromonitor PricewaterhouseCoopers net sales grew 2% from 1997 to a value of US$15.3 billion in 1998. As one of the leading global auditing, consulting, and accounting firms, PricewaterhouseCoopers, was formed by the 1998 merger of two of the top management consulting firms, Pricewaterhouse and Coopers & Lybrand. PricewaterhouseCoopers operates 850 offices in 150 Countries, allowing the company to serve a wide range of local, global, and international companies as well as public institutions. The company range of services includes auditing, accounting and tax advice, business process outsourcing, information technology, human resource consulting, and legal services through a worldwide network of affiliated law firms. During fiscal 1999, PricewaterhouseCoopers agreed to join forces with Methodfive, a company formed to help firms design their web presence, in an effort to expand their e-business service offerings.

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Demand conditions Industry Structure Factor conditions advancements should continue to fuel sales in the computer and software consulting sector during the forecast period. Computer and software revenues are forecast to grow 69.9% from 1999 to a value of US$15 billion in 2003. The tax consulting sector is expected to continue to be the least dynamic during the forecast period, increasing 41.7% from 1999 to a value of US$1.3 billion in 2003. Increasing 59.7% from 1999, the public relations consulting sector should reach a value of US$12.7 billion by 2003. SECTOR FORECASTS 1999-2003 US$ million 1999 2003 Management consulting 33,220.6 54,773.8 Computer and software 8,814.3 14,974.0 Public relations 7,930.6 12,663.4 Other consulting and design 6,885.5 11,055.4 Engineering and design 3,704.2 5,828.7 Tax 922.1 1,307.0 Source: Euromonitor Source:http://www.usatrade.gov/ccg

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Appendix H Market studies on specific countries in other regions

Demand conditions Industry Structure Factor conditions KUWAIT To increase the efficiency of its indigenous manpower and to reduce reliance on expatriates, Kuwait needs management consulting firms for the organization of the administrative and financial sectors. It also needs consultants for defense planning and major project management. According to the World Bank's report on privatization in Kuwait, an efficient and low cost financial sector is necessary if Kuwait wants to meet objectives of increasing economic efficiency and overall productivity. To achieve this, Kuwaiti banks need the services of management consulting firms. The Ministry of Finance and Ministry of Communications in particular require the services of management consulting firms to help them proceed with their privatization programs which have been approved. There is also privatization talk involving information, electricity and water sectors, the Ports Authority, the Kuwait Airways, and the Free Trade Zone. The following government

The frequent discussions about privatization, rationalization of Expenditures, and the Kuwaitization frequently associated with discussions about replacement of expatriates in the public sector by Kuwaiti nationals, resulted in the creation of a few management consulting firms in Kuwait to take advantage of these opportunities. Engineering consulting offices are numerous in Kuwait and have existed for a long time. International firms created joint ventures with local agencies for management advisory as divisions of auditing or accounting offices like Arthur Anderson, KPMG Peat Marwick, Coopers & Lybrand, Price Waterhouse, and Ernst & Young. Local firms play a small role in this sector. The successful ones associated themselves with U.S. firms, such as Coopers & Lybrand with Bader & Co., Ernst and Young with Ahmed Al-Eiban & Partners, Price Waterhouse with International Audit Bureau and KPMG with Masoud & Co. Most U.S. management consulting companies have established themselves as reputable organizations with widespread knowledge

Foreign management consulting companies pursuing governmental projects in Kuwait must be registered with the Ministry of Planning. The Consultant Department screens all registered companies for projects and recommends the most qualified to handle a particular project. There is a higher Consulting Committee that approves the list of qualified companies. This committee comprises representatives From the following government agencies: Ministry of Public Works Ministry of Communications Ministry of Electricity & water Ministry of Planning Department of Legal Opinion and Legislation Kuwait Municipality Council of Ministers Management consultant companies do not require an agent in Kuwait. If a management consulting firm is selected for a certain governmental project, it is necessary to associate itself with a local management

170

Demand conditions Industry Structure Factor conditions agencies are expected to be privatized, though partially, within the next few years: Oil Sector: Kuwait National Petroleum Company (KNPC) announced it will privatize about 33 gas stations this year. This will be carried out as soon as studies for this move are completed. Other sectors of the oil sector like transportation, international sales and partnership agreements, etc. Three large American firms are currently providing management consulting services to the oil sector: Parson International for Kuwait Oil Company (KOC), Stone & Webster for the Kuwait National Petroleum Company (KNPC), and Fluor Daniel for the Petrochemical Industries Company (PIC). The Ministry of Information will launch the first cable TV project after the final approval is obtained from the Council of Minister's Finance Committee. The feasibility study has been completed. a sahreholding company will be funded at U.S.$33 million. 65% of the shares will be open to the public and the remaining 35% will be distributed to company founders. The cable TV system will be implemented through a multi-video distribution system, described as a micro-wave wireless cable. To initiate this project an international management consultant is required. Free Trade Zone: Kuwait has sanctioned the establishment of a free trade zone. A local company has been awarded the contract

and experience in the international and Kuwaiti markets. Since most Kuwaiti decision-makers and managers are U.S. educated, U.S. management consulting firms have an edge over other countries. The major competition to U.S. consulting firms comes from British companies who are present in some sectors like the power and health sectors, though on a small scale. In other sectors such as construction, civil aviation, information management systems and technology, financial services, educational systems, university education, etc. American firms dominate. The real competitive factors which American firms should consider include technical merit, reputation and price. Past experience in similar projects, preferably in the region, is also an advantage. Revenues of management consulting services in 1996 amounted to approximately $ 70 million. The local companies share was about 20%; U.S. firms was an impressive 70%; British firms took 10%. This figure is expected to grow by a minimum of 20% each of the next three years if the government goes ahead with its plans to privatize, Kuwaitize, reducing the number of expatriates in the public sector. Management consulting services are needed to assist the government in achieving its objectives.

consultant. The relationship may be one of partnership or a joint venture. For the private sector, foreign firms should contact institutions directly to market their services and expertise. Foreign firms are also reminded that foreign companies doing business in Kuwait are subject to an income tax of up to 55% of the net profit. The government is planning to reduce this high percentage to about 30-35%. Kuwait has a modern banking system and local banks have correspondent banks in the United States. There are no restrictions in Kuwait on the transfer of currency. Several factors play a vital role in shaping the market's demand for management consulting services in Kuwait. Kuwait is a small country with a total population (1997) of 1.75 million. More than 60% of the total are non-Kuwaitis. Kuwaitis constitute 93% of the total labor force in the public sector but form only 3% of the labor force in the private sector. The number of Kuwaitis seeking jobs is increasing and the Ministry of Planning and Parliament warn against a forthcoming unemployment problem. To create jobs for

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Demand conditions Industry Structure Factor conditions to manage the zone. This company requires the services of an international consulting firm for the management of the project. To create jobs for the increasing numbers of Kuwaiti graduates and to reduce dependence on expatriates, the public and private sectors need to hire currently inexperienced local staff to fill jobs occupied by expatriates. Government end-users include: --Ministry of Defense -- Ministry of Education -- Ministry of Finance together with its Kuwait Investment Authority --Ministry of Health --Ministry of Planning --Directorate of Civil Aviation --Kuwait Petroleum Corporation --Kuwait University --Public Authority for Applied Education -- Public Authority for Industry --Public Authority for the Protection of the Environment - Civil Service Commission Management consulting services are needed to help reduce the number of expatriates who impose a heavy burden on the government's budget and their services are also required to upgrade capabilities of Kuwaitis in performing their job responsibilities. Management consulting services are most needed for the following sectors: major projects, health care services, human resources development, banking and

American consulting firms are doing very well in this service sector. American consultants in Kuwait include: Turner, Parsons, Synergy, Ernst Young, KPMG Peat Marwick, DMJM International, AMIDEAST, Inc., Arthur Anderson, Booz-Allen & Hamilton Inc., Chevron, Coopers & Lybrand, Stone & Webster, Merz &McKlenan, etc.

Kuwaitis, the government: -- Decided to replace 10% of the expatriate public sector labor force every year with Kuwaitis. This will create about 5,000 jobs for Kuwaitis every year. This also means, at least theoretically, that the public sector will be Kuwaitized within the next ten years. This is a very challenging target and needs, to materialize, the advice and expertise of consultants in human resources development and training. U.S. companies are advised to include, in any proposal to governmental agencies or public companies, methodologies on management development and training. --Enacted a law forcing local companies to have a minimum of 10% Kuwatis in their workforce. Companies that comply with this law will be given incentives in the form of tax cuts and subsidies. --Announced a privatization program for certain sectors and will introduce a privatization law to create new employment opportunities for nationals in the private sector. The concerned government agencies seek management consulting services to help them absorb those nationals in an effective and productive way. --Will impose health care

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Demand conditions Industry Structure Factor conditions financial services, computer technology; information services, organization analysis and development, project management consulting services, and quality control. The end users of the basic management consulting services include various governmental entities and institutions.

insurance on expatriates in the near future because it wants to end more than 40 years of free medical treatment for expatriates to offset some of the heavy expenditures on medical services. Health insurance service is new in the country and the task will be assigned to four national insurance companies which lack experience. This policy will also encourage construction of private hospitals that can offer competitive medical care through modern equipment, good doctors, and good management teams. It will create significant opportunities for American management consultants in these fields. -- Established a new Public Authority for Industry which paid US $670,000 to the Arab Development Center for its administrative organization. Similarly, the Public Authority for the Applied Education & Training paid the same local consulting office US $3.35 million to assess the needs of ministries and governmental entities for technical labor force by the year 2010. Kuwait Petroleum Corporation (KPC) approached our office recently requesting addresses of U.S. consulting firms in finance and administrative organization. Other larger institutes like Kuwait Airways, the Ports Authority and investment companies will

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Demand conditions Industry Structure Factor conditions require the assistance and expertise of management consulting firms in the near future. Major projects that cost over $3 million require international consultants to establish designs and specs for these projects before they are announced to local or/and international contractors. Some of these projects that contracted management consultants include: --The Oil Sector Complex (KPC/Ministry of Oil Headquarters): $83 million: The construction manager of the project is the British Bovis with the local Projacs. Costs are US $3.5 million. The project consultant is the local Salem Al Marzouk and Sabah Abi Hanna (SSH) together with the Canadian firm Arthur Erickson. The project will be completed in March 2000. --The New Al-Zoor Power Plant: This plant will generate 2400 MGW of power and 48 million imperial gallons of drinking water. The project has been assigned to American companies. Two consultants are required: one for the power plant and another for the desalination plant. The consultant will be selected in November 1997. --The Central Prison Complex

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Demand conditions Industry Structure Factor conditions (Rehabilitation and Deportation Center) which will cost more than US $40 million. An American consultant will most likely be selected for the project. --Sulaibiya Water Distribution Project: The Ministry of Planning is in the process of selecting a consultant. -- The Ministry of Communications contracted with the Swedtel Consultant to develop and improve the telephone network in Kuwait. Costs were US $452,000. --Kuwait Airport Control Tower and Radars: the U.S. DMJM International was appointed the Project Manager at a cost of $7.14 million. --Frederic Harris, Inc. was awarded the consultancy work for the Ahmadi north pier. Consulting firms do not need local agents; they do need to associate themselves with a local consulting office to work as partners because Kuwait wants to transfer expertise to its national companies through collaboration with international establishments. American companies are reminded that they are subject to a 55% tax on their net profits in the country. The

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Demand conditions Industry Structure Factor conditions Government is considering reducing that to 35%.

WEST BANK Public and private institutions seek a variety of consultings ervices for product development, quality control, amrketing, setting up corporate administrative systems, financial analysis, and use of information systems technology.

Several local firms provide the services but demand is growing rapidly, particularly for municipal and public administration offices. Inetrnational donor financing of technical training should continue to promote a demand for these services. Competitive pricing is a factor in obtaining public and private contracts

PANAMA The government's decision to liberalize the economy and the implementation of a major privatization program increased the market potential for consulting services in Panama. Future consulting requirements will focus on key sectors such as the environment. The preservation of the Panama Canal watershed is a priority. Also, cleaning of Panama bay, another multi million dollar environmental project will require a substantial amount of consulting services. Other promising areas for consulting services are public health, financial management for the government, information technology, justice administration, and urban development. Market Data ($ millions) 1997 1998 1999) Total Market Size 23.0 27.0 33.0 Total Local Production

6 8 10 Total Exports

0 0 0

According to local procurement laws, contracting of consulting services is done through public bids. Bidders are pre-qualified with regards to their international reputation, with a subjective evaluation by a panel as to general expertise. Financial strength and experience are also taken into consideration. In the public sector, consulting contracts are usually financed by international development banks, supporting structural reforms in the economy. USAID is also involved in financing projects dealing with the environment and administration of justice. Consultants initiating work in Panama typically enter into a joint-venture agreement with a local firm, so as to simplify start-up by sharing resources. The market for consulting services has been clearly dominated by U.S. firms, and is expected to remain so in the foreseeable future.

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Demand conditions Industry Structure Factor conditions Total Imports 17 19 23 ARGENTINA The executive training market fluorished in the 1990’s. Today, it is a large market with 60% of all professionals taking some type of executive training course. Projections in 1999 and 2000 indicate a total growth of 16 percent.

Market is dominated by US firms . The Argentine taste for US management style provides a competitive advantage to US subsidiaries in the country.

Source:http://www.usatrade.gov/ccg

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Appendix I List of International Associations of Management Consultants

Africa Federation of African Consultants (FEAC/FECA) PO Box 1387 01 Abidjan

Latin America Federacion Latinoamericana de Asociacionoes De Consultores (FELAC) Suipacha 552 , Piso 4 Of. 1 1008 Buenos Aires Argentina

Europe European Federation of Management Consulting Associations (FEACO) 1-5 Avenue de la Joyeuse entrée 1040 Bruxelles

Interregional International Council of Management Institutes (ICMCI) 32/33 Hatton garden London EC1N 8 DL United Kingdom

Europe European Foundation for Management Development (EFMD) 40 rue Washington 1050 Bruxelles

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Appendix J Strengths and Weaknesses

Strengths Weaknesses

Firm Infrastructure ♦ Local consultants offer services at competitive costs as compared to their foreign counterparts

♦ Growing number of local firms that develop partnerships and affiliations with reputable foreign consultants who are interested in establishing an office and entering the Philippine market

♦ Availability of information technology resources which enables consultancy firms to access information on market opportunities worldwide

♦ Many of the local consultants either focus only on a particular niche or a small portion of the market, so business gets affected when they compete with foreign companies that offers full-service.

♦ Funds are not adequate to enable local consultants to market services abroad where personal presence and networking is needed.

♦ Relatively few linkages with inernational groups, associations abroad that would enable firms to ease entry of Filipino consultants in foreign markets

♦ Lack of financial capability to maintain regular staff

Human Resource Development

♦ Management consulting firms attract competent people, whose work is on a part-time or per project basis. These people are mostly attracted to the firm because of exposure to companies and projects and flexibility of time rather than the salary

♦ Presence of Filipino consultants who have a very strong educational background, relevant industry experience, and international exposure/training

♦ Trainability of Filipino consultants ♦ Computer literacy of Filipino

consultants

♦ Great disparity of rates provided for Filipino consultants as compared to their foreign counterparts

♦ Lack of qualified individuals in specialized areas

♦ Lack of full-time management

Technology Development

♦ Integration of information technology in the services of large players

♦ Slower growth and development of smaller firms to integrate IT into their services

♦ Too star-struck by academic fads and fashions, which are usually based on ideas that have some merit but whose value and applicability in the local setting may be different as compared to countries in the West, where these ideas usually come from

Procurement (People ♦ Hiring of some consultants, especially ♦ Some of the employees hired,

179

Strengths Weaknesses and Information)

experts, are on a per project-basis which leads to lower costs of maintaining people

use management consulting firms as a training ground and eventually leave the company

♦ High turnover of people who may eventually be employed by client companies or by other consultancy firms

♦ Difficulty in access to updated and reliable information especially those data related to the Philippines

180