Management consultants’ new gravy train: buying other companies

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.Lay-offs are changing PowerPoint shows because the heraldic emblem of the administration marketing consultant. McKinsey & Co is the newest to swing the axe, pruning its workforce by a reported few thousand over the subsequent two years. The blue-blooded administration consultancy was preceded in its payroll trimming by Accenture within the US and among the UK’s Huge 4.Certain, the spectacle of administration consultants swallowing the recommendation they routinely mete out to purchasers will afford observers greater than a bit of schadenfreude. It exhibits the sector shouldn’t be proof against disruptive forces. Human jobs are falling to synthetic intelligence. Workers churn is sclerotic, and when workers don’t stroll voluntarily, some should be pushed.However consultancies are additionally taking one other leaf from their very own playbooks: they’re sizzling on the acquisition path. A number of are placing offers, both instantly or through enterprise capital arms, to purchase entry into specialised industries reminiscent of life sciences, including individuals they suppose they want at the same time as they exit “on a compressed timeline” individuals they don’t.Accenture earlier this month purchased Ryght AI, which makes use of agentic AI to speed up the time-consuming enterprise of trial feasibility and affected person recruitment. Earlier purchases residence in on cell division and early most cancers detection.A second bucket of offers entails ready-made instruments of the commerce, to measure the effectiveness of promoting, say, or digital design or enterprise software program specialists. IBM, Accenture, India’s Wipro and KPMG have all purchased specialist SAP corporations.At coronary heart these offers, largely for small and undisclosed sums of cash, purchase expertise and mental property that will be expensive and take time to develop in-house. That makes them considerably akin to Huge Tech’s acqui-hires, illustrated on a grand scale by Meta Platforms’ buy of Scale AI. Exhaustive as they’re, hiring rounds at McKinsey usually tend to yield vivid generalists than top-of-the-pack tech wunderkinds or biotech boffins.Those that don’t take to the marketing consultant life should still discover a residence within the corporations’ enterprise capital arms. Shoppers, in the meantime, get entry to trade particular points: the AI-driven instruments to speed up clinic trials, as an illustration, or to measure the return on advert {dollars} in a number of swipes.Naturally, this jargon-packed trade shouldn’t be averse to what huge corporations typically consult with as “transformational offers” — typically denoting an enormous swerve into a brand new enterprise line. France’s Capgemini in October paid £3.3bn for US-listed WNS, a enterprise course of providers group. It plans to create next-level outsourcing: changing labour-intensive IT assist desks and name centres in India, say, with agentic AI to tackle back-office and different processes.There’s an irony right here: consultancies have enthusiastically contributed to the physique of analysis displaying most offers depart buyers worse off. When the primary asset is individuals, that’s a good greater danger — simply take a look at the chequered historical past of funding banking mergers. However the premise of promoting recommendation is that these with good concepts can buck the value-destructive development. What higher method to put that to the check?louise.lucas@ft.com