As Businesses Reach Out for a Helping Hand, the Helpers Themselves Struggle to Keep Steady.

"The market has been quiet," said Ivan Kalinin, the development director of MOST Marketing, a Moscow-based firm specializing in anti-crisis consulting. "What is going on now will not be here forever, and everyone is waiting for what will come next."

Switching to a waiting mode is a tough task in its own right. For many it means tightening their belts and ridding themselves of inefficient units and personnel as short-term measures until the dust settles and the future looks more certain than it does now. A popular Russian drugstore network 36.6 is about to conduct wide scale optimization which may result in the shutdown of about two percent of its 1,168 stores across Russia. Many companies have opted for layoffs. Even non-private Russian companies have to go through this routine. Sberbank, which has hired McKinsey&Company to help rework their mid-term strategy, has announced that it will cut its workforce from the current 270,000 to 200,000 by 2014. The state-owned bank VTB24 said that it would cut up to seven percent of its personnel. Employment agencies are seeing 40 to 50 percent more people resorting to their services, often asking for lower salaries than before. Well aware of this situation, consulting companies tried to boost their appeal to their existing and potential clients by changing their profile and appearing more crisis-focused. This week alone two firms, the communications and marketing consultant Kontakt-Expert and Welhome, offered expanded anti-crisis packages.

New services that pay attention to the smallest details of a company's challenges amidst a severe financial crisis include evaluation of investment projects and how to increase both sales effectiveness and the liquidity of projects.  "I'd say more than half of consulting companies working in all segments, including the larger ones, introduced new anti-crisis services," said Kalinin. "Often, they even go as far as to just add the word 'crisis' to the projects that were already on the list, so personnel management has been turned into anti-crisis personnel management. Yet, it's often the same service that existed before, just cheaper and more short-term."

Welhome, a real estate consulting firm, say they were simply adjusting to the changing market environment when they expanded their anti-crisis service package this week. Demand for designing new concepts and new projects and estimating profits for land commercialization has fallen drastically. Businesses are more interested in cutting costs on existing projects, which cannot be halted but at the same time cannot continue running at the same expense. This can often be done by outsourcing research and marketing services to outsiders, who can do it as efficiently but for considerably less. "They turn to the consulting companies and simply cut their own departments which were doing this job," said Vladimir Kuznetsov, the head of project consulting at Welhome.

A crisis of the anti-crisis

At the same time, about half of the businesses that suddenly found themselves cash strapped prefer to rely on their own capacities to persevere through the crisis. "Today, only the larger companies hire consultants, most prefer using their own means," said Kalinin, adding that those who go for MOST's anti-crisis services are the same clients the firm has been working with since long before the financial crisis ensued. "We'd like there to be a demand for that, but there is really no new demand," he added.

Hiring a consulting firm to help handle the transition is a very costly move in itself. On average, devising and implementing an anti-crisis scheme can eat up to 0.5 percent of a company's yearly income. The toll can be even more severe for smaller companies. Small businesses have already seen their resources

stretched thin amidst a liquidity crisis in the banking sector, which has made it much harder to borrow money. Hiring a consultant for as much as $1,200 per day to work on an anti-crisis project that could take up to several weeks to complete can cost as much as a few percent of their yearly income, and eliminate any profit derived from optimization.

"If they had a few stores and two were posting losses, but one was profitable,they just looked at the mean profits; all business units are getting evaluated by their owners and those found inefficient get cut," said Kalinin. Even the consulting companies themselves are feeling the impact of the crisis and are doing all they can to make it through with as few losses as possible. IBS, one of the leading providers of IT solutions for management and management consulting services, which are currently the highest in demand on the market, has recently tried to renegotiate its deal to rent over 36,000 square meters in

the Nordstar Tower, a new business center currently under construction in Moscow. According to the Kommersant daily, IBS is trying to cut down the $36.8 million annual costs, which they suddenly can no longer afford. "The market for consulting projects has at least halved," said Kuznetsov. The new anti-crisis services offered by consulting firms do not necessarily meet demand, but at least help retain existing clients and keep the business running at a time when few investments are made and many companies are reluctant to enter new markets and acquire new assets. "Our clients don't know what they want to do as of yet, except cut their operations to see the crisis through," said Kalinin. "Anti-crisis or not, consulting is as troubled as everyone else, if not more."

One emerging field that is also gaining momentum right now is investment brokerage, also as a direct result of the crisis. "A lot of assets have been put on sale by owners who are forced to put them back on the market, often with vast discounts; this, along with anti-crisis advice, is the leading field of activity for consultants right now," said Kuznetsov.

Источник: Russia Profile