Smaller consultancies can capitalise on the trust deficit in major accounting firms
The growing number of scandals surrounding major auditing firms and incidents of state capture has led people to question the model of auditors doubling up as consultancies, according to CEO and co-Founder at hoorah Digital Shaune Jordaan. Smaller consultancies can thrive in such a scenario.
The consulting industry has been a lucrative sector across the world for a number of decades now. Within this sector, the Big Four accounting and advisory firms – Deloitte, EY, KPMG and PwC – in addition to management consultancies McKinsey & Company, Bain & Company and BCG have come to reap the lion’s share of benefits.
In South Africa, however, this scenario has been skewed in recent times. Deloitte, KPMG, McKinsey and Bain have come to be embroiled in major accounting scandals over the last two years, while the others have been implicated in a number of incidents that are yet to come to conclusion.
According to Shaune Jordaan, the big names are starting to lose ground as a result of these events. Traditionally, according to Jordaan, the familiarity with a client’s operations that came with auditing its accounts positioned major accounting firms as the best options to support with growth and management strategies.
However, clients have now begun to question whether these firms have their “best interests” in mind. At the other end of the spectrum, a number of smaller consultancies are emerging – including Hoorah Digital – which are anxious to prove themselves and have the resources to focus solely on management consulting.
These smaller firms are also emerging in line with contemporary trends, often endowed with strong digital capabilities. According to Jordaan, cost-effectiveness is an additional benefit of employing smaller firms, given that they have more specific specialisations and don’t claim to have multifaceyted expertise.
“In a tough economic environment, it makes a lot more sense to tackle things one at a time. And because you can quickly tell whether what they’re doing is working, you aren’t locked in to expensive, long-term contracts.In fact, some of the braver specialist consultancies base their payment models on the results they achieve for their clients, rather than a flat fee,” says Jordaan.
“This not only benefits the client, but goes a long way to helping restore trust in the consultancy model. There’s clearly a lot of work to be done, but with the right results, consultancies could again help companies be the best they can be,” he adds.
