In-house experts crowding out foreign consultancies

Oliver Wyman takes steps to close Seoul office

By Park Jae-hyuk

Foreign consultancies in Korea, which once flourished as the most-favored workplaces among young jobseekers, are under serious pressure from domestic companies that are aggressively strengthening their in-house experts to cut costs.

The latest example is Oliver Wyman, a U.S.-based Marsh & McLennan Companies' (MMC) consulting subsidiary specializing in banking and financial services.

According to local media reports and industry insiders, Wednesday, the second-tier consultancy decided to cease operations here in response to deteriorating revenue over the past few years. This came four years after the departure of multinational IT consultancy Accenture.

Oliver Wyman's global headquarters has already pulled down the introduction to its Seoul office from its official website. An employee of another MMC local subsidiary told The Korea Times: “Oliver Wyman workers have not come into the office since late October.”

Those affected will be transferred to other offices in the Asia-Pacific region or move to rival consultancies. The firm's global headquarters is yet to answer The Korea Times' requests to confirm the closure and the reason for it.

Sources familiar with the issue attributed the highly probable exit to the firm's worsening profitability, saying it has resulted from Korean financial companies' efforts to enhance their in-house consultants.

After opening an office here in the early 2000s, Oliver Wyman helped Shinhan and KB Kookmin banks upgrade their key performance indicators in 2004 and in 2013, respectively. It also gave advice to domestic insurers including Samsung's financial services units.

However, the nation's leading banking groups have continued to cut their reliance on foreign consultancies in an apparent measure to save money. Their think tanks, which are under the direct supervision of group chairmen or bank CEOs, have developed expertise by hiring outside experts.

Shinhan Financial Group employed former Bain & Company senior global director Sunny Yi in 2018 to lead its Future Strategy Research Institute. After Yi was appointed Shinhan DS CEO last year, former Samsung Economic Research Institute Vice President Lee Keon-hyok succeeded him.

The KB Financial Group Research Institute has been led by Vice President Cho Kyung-yup, a former reporter at the Maeil Business Newspaper.

Along with banking groups, Lotte Card appointed former Oliver Wyman CEO Cho Jwa-jin to lead the card issuer, after the private equity firm (PEF) MBK Partners' asset acquisition. Lotte Insurance, owned by another local PEF, JKL Partners, recently hired two former Oliver Wyman consultants as executives.

Industry officials warned that other mid-tier foreign consultancies could also be forced to leave Korea if they are unable to give useful advice to domestic companies.

Since the global financial crisis in 2009, consulting firms here have cut their payrolls to cope with the challenging business conditions. Some even decided not to charge clients if their advice was not helpful. Amid growing difficulties, Accenture left Korea in 2016 after selling its local operation to Metanet, a local digital business platform provider.

“Korean financial companies and big businesses have already hired many consultants and their foreign networks have been much stronger as they have become global enterprises having many offices worldwide,” an executive at one of top-tier foreign management consulting firms said on condition of anonymity.

“It has therefore been much more difficult for foreign consultancies with limited international networks to attract globalized financial institutions and businesses in Korea.”