Editor: In 2004, Edwin Sim established Human Capital Alliance, the Premier Executive Search Firm in Thailand. Between 1997-2003, Edwin Sim was CEO of Korn Ferry Thailand. This article was first published in July 2001.
K I Woo looks at how transaction-oriented professional service providers are shifting their focus to building client relationships.
Coming out of the financial crisis, Asia ’s multinational professional service providers are changing their strategic focus.
During the economic boom, major international law, accounting, architectural and engineering, management consulting and executive recruitment firms only had to sit in their offices while their phones rang off the hook. They spent most of their time deciding which potential clients to call back.
As the crisis tightly gripped the country, many professional service providers switched gears and became restructuring specialists. Forced to restructure or go out of business, clients continued to run to them. Business for professional service providers continued to boom during the crisis. They ainly focused on handling short engagements as their clients fought to use their services.
Today, as the crisis winds down, many multinational service providers operating in the region are again switching gears. Although many major consulting firms have cut back their restructuring operations and sent scores of foreign specialists home, other firms are expanding in Thailand by finding growing niche markets such as systems formulation, implementation and integration.
However, most professional service providers are in a state of flux.
During the past eight years, the booming US economy acted as the world’s growth engine. Today, with the US and European economic experiencing slowdowns, and the Japanese economy continuing to slumber, there are few external factors to drive small regional economies.
Closer to home, professional service providers are forced to adjust their operations as their clients prepare for an uncertain economic environment. During the boom times and the recent critical restructuring period, many large companies routinely hired professional service providers on a contractual basis when they needed them. If the firms wanted a specific problem studied and rectified, they would call in a professional service provider.
Today, major multinational companies as well as Thai companies are no longer satisfied with this type of arrangement. "These companies are now demanding a higher level of service," said Edwin Sim, managing director and country manager Korn Ferry Thailand .
Major Thai companies that have virtually completed their restructuring processes are now looking at how they can best implement their new strategies and visions during this time of uncertainty, Sim said. "They are now demanding that service providers give them continuous consultative services."
Companies that managed to survive the economic crisis are no longer comfortable calling service providers just to handle emergencies. "In a more uncertain economy, no CEO wants to fight unnecessary fires, which can be prevented with solid strategic planning and incisive policy implementation," he said.
For the previously transaction-oriented service providers, the adjustment from transaction-based services to relationship-based services will mean new challenges. However, service providers such as lawyers, accountants, executive recruiters and other management consultants can invariably create a win-win situation for themselves as well as their clients.
In the long run, the service providers will be able to spread client acquisition costs over a customer base that uses more of their products and services. Clients benefit because they experience a more hands-on partnership with their trusted service providers. Rather than fighting fires when problems arise, the service providers are constantly available because under a retainer, they are continuously advising senior management during critical strategic policy formulation and implementation activities.
