Reputational damage for consulting is impacting smaller firms in South Africa

02 July 2019 2 min. read
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As larger consulting corporations in South Africa begin targeted efforts to rebuild their reputations in the country, trust in these firms remains shaken across the country, which paves the way for smaller consultancies to capitalise on the gaps in the market left by larger firms.

This is according to executives at Letsema Group, which was amongst the stakeholders in the major Gupta scandal that put Big Four accounting and advisory firm KPMG and global management consultancy McKinsey & Company into a world of trouble in the South African market.

Letsema was originally the firm on the Transnet contract, but was immediately sidelined following the entry of McKinsey & Company into the equation. The firm has previously called for a more stringent regulatory environment surrounding the consulting environment in the country.

Reputational damage for consulting is impacting smaller firms in South Africa

Now, as the dust settles from the various scandals, Letsema is in a position to assess the consulting industry in South Africa from a distance. As per the firm, smaller consulting firms in the country are caught in a dichotomous position in South Africa, wherein the trust deficit in larger firms has presented an opportunity, but the industry as a whole has a tarnished reputation.

As a result, the trust deficit is filtering down to the smaller firms as well. “There has been a huge backlash against consulting firms. It creates a gap for smaller firms but we still have to see how that plays out,” explains Isaac Shongwe, Chairman of the Letsema Group.

Chief Executive of Letsema Derek Thomas added, “There are an awful lot of competing models [in the South African market]. I wouldn’t encourage a youngster to enter this business now . . . I think the industry is overtraded, with many people whose service offering just isn’t up to it.”

Major consulting firms, meanwhile, have embarked on targeted initiatives to help rebuild their reputations in the country. KPMG restructured its entire operations earlier this year, with a completely new set of practices. Earlier this month, Bain & Company also appointed an African Oversight Board to prevent similar problems in the future.