By Kim Jae-kyoung
The domestic consulting industry is undergoing a major shakeup in pecking order, with senior partners moving to rival consultancies amid rapid market growth led by growing competition among local firms to find new growth engines.
The industry has been dominated by three global strategy consulting firms ― McKinsey & Company, the Boston Consulting Group (BCG) and Bain & Company. Among them, McKinsey has been leading the industry here, while BCG and Bain were both runner-ups.
However, the rapidly-changing environment triggered by the global financial crisis has changed the landscape of the industry. BCG is about to emerge as the industry leader as it recently strengthened its manpower by scouting three top-level senior partners from Bain.
According to industry sources, three senior partners, including Kim Yun-hee, formerly co-head of Bain, moved to BCG. Kim is regarded by industry experts as one of the most experienced senior managers in the strategic consulting business.
The move is considered big enough to change the pecking order of the industry, given that it is very hard to find experienced senior partners in the industry due to the lack of top-level consultants. In particular, the loss can deal a blow to Bain as Kim was one of the key figures of the company.
“Three key senior partners recently left us,” an official from Bain said on condition of anonymity, refusing to comment on why they moved. To offset the loss, Bain recently recruited two experienced consultants from McKinsey.
McKinsey is also struggling as it recently lost its biggest client LG Electronics. According to the source, LG Electronics and its affiliates have stopped receiving consulting services from the company in the wake of a string of obstacles for the electronics giant.
LG has been suffering from a business setback over the past year, as it is falling behind its rivals Samsung and Apple in the lucrative smartphone sector amid growing uncertainties in the global consumer electronics markets.
A week ago, LG unveiled a plan to streamline its organization by slimming down its business unit and replacing all top five foreign executives with Korean nationals as part of massive restructuring efforts.
McKinsey’s Korea operation has been a dominant leader here by growing fast since the late 1990’s as it secured major Korean firms, including LG, Kookmin Bank and Woori Financial Group.
The source said that the transformation is in line with the industry evolving to a new stage following the global financial crisis caused by the U.S. sub-prime mortgage meltdown.
“From 2008 to 2009, the consulting industry stayed in the doldrums as global firms balked at finding new business opportunities due to the sluggish market sentiment caused by the financial crisis,” another industry source said.
“Major Korean conglomerates, including Samsung, SK and Doosan, showed a wait-and-see attitude until last year. However, they have begun spending more on consulting services from this year to develop new growth engines in the post-crisis era,” he added. “The industry also sees growing demand from the financial sector as there have been large-scale merger and acquisitions. Depending on how to capitalize on new opportunities, the industry leader can change anytime.”