Management consultants often bring their own proprietary methodologies or frameworks to guide the identification of problems and to serve as the basis for recommendations with a view to more effective or efficient ways of performing work tasks.
[3] The economic function of management consulting firms is in general to help and facilitate the development, rationalization and optimization of the various markets pertaining to the geographic areas and jurisdictions in which they operate.
His business card read "Consulting Engineer – Systematizing Shop Management and Manufacturing Costs a Specialty".
[citation needed] The initial period of growth in the consulting industry was triggered by the Glass–Steagall Banking Act in the 1930s, and was driven by demand for advice on finance, strategy and organization.
[11] From the 1950s onwards, consultancies expanded their activities considerably in the United States, and also opened offices in Europe and later in Asia and South America.
[15] The industry experienced significant growth in the 1980s and 1990s, gaining considerable importance in relation to national gross domestic product.
While three of the Big Four legally divided the different service lines after the Enron scandal and the ensuing breakdown of Arthur Andersen, they are now back in the consulting business.
[16] The name change was effective starting January 1, 2001, and Accenture is currently the largest consulting firm in the world in employee headcount.
[18] The industry stagnated in 2001 before recovering after 2003 and then enjoying a period of sustained double-digit annual revenue growth until the financial crisis of 2007–2008.
[24][25] Marvin Bower, McKinsey's long-term director, has mentioned the benefits of a consultant's externality, that they have varied experience outside the client company.
In the modern economic environment, management consulting firms are typically classified under the umbrella term of corporate service providers.
[citation needed] Consultants have specialized skills on tasks that would involve high internal coordination costs for clients, such as organization-wide changes or the implementation of information technology.
In addition, because of economies of scale, consultants' focus on and experience in gathering information across markets and industries enables a higher cost-efficiency than if clients were to perform research themselves.
The authors noted that with knowledge being democratized and information becoming more and more accessible to anyone, the role of management consultants is rapidly changing.
[citation needed] As such, the firms utilize their ability to serve as knowledge brokers within each market segment and industry addressed.
As with other client-contractor relationships, settling for liabilities that exist outside the scope of the contract deliverables has been proven to be of considerable difficulty,[37] also in management consulting.