The Consultancy Market in Kosovo – “A tale of Moving between Markets”

(This case study was produced on the request of the Enhancing Youth Employment project in Kosovo (eye-kosovo.org) and is re-published here with the permission of the project)

Background

The consultancy market in Kosovo is essentially the creation of international donor agencies operating in the country after the war of 1999. The post-conflict challenges were multi-faceted, including re-building public and private infrastructure and constructing new institutions and the rule of law from scratch. The early years of privatization and entrepreneurship saw the emergence of a private sector dominated by micro-enterprises involved in trade, retail and small-scale service provision. Within this development context, there was a strong demand by donor-funded projects for permanent staff and freelance consultants.

However, very little consultancy was supplied directly to local companies by local consultants. The reasons for this were multiple. Newly established companies were too busy working to stay alive in the market. Few companies were aware of the internal constraints holding back their growth, and even fewer companies were taking actions to overcome constraints. Also, few Kosovo companies had the financial resources to invest in engaging external experts.

To overcome this market failure, donor projects subsidized the supply of consultancy and production assets to private companies as a means of boosting their competitiveness. Donor project also invested in strengthening the capacities of local consultants to supply consultancy services.

The existence of two markets

Today, after 15 years of economic transition, the consultancy market in Kosovo can best be described as two very different markets. In search of income, the consultants float between these markets.

Consultant markets

Market One is the heavily subsidized donor project market, which creates numerous job opportunities in diverse skills areas. The business model of the individual consultant is to cover as many as these areas as possible, as a means of increasing the chances of employment. As a result, the consultancy market is now comprised of generalists rather than specialists. This means that there is a large pool of consultants capable of offering services to Start-ups and companies of very low maturity, but very few consultants who have what it takes to serve the needs of the lead firms. “There are clearly two groups of consultants today in Kosovo. One group continue to chase the next donor funded opportunity, while the other group, albeit much smaller, includes consultants who really want to work and develop within this profession. They invest in themselves, are customer-oriented and conscious about their ‘name’ in the market.” (Diell Grazdani, Director of BCC, October 27, 2014)

In Market Two, there are a very small group of Kosovo consultants who are supplying private clients with services that they in turn are willing to pay for, which in most cases include auditing, tax advice and accounting services. “It was our accounting skills that got us in the door at Rugova. Having supplied initial services to the satisfaction of our client, we started identifying other consultancy needs in the company and cross-selling other services, such as coaching and marketing.” (Arban Avdiu, Arizona Partners, October 24, 2014)

As companies grow their needs become more specific and more technical. Suddenly, there are very few qualified local consultants on the market to do the job, causing a supply deficiency, which acts as a direct constraint on company growth. On a positive note, the growing demand for consultancy services by more mature companies in Kosovo, and their willingness to pay for the ‘right’ services, creates a substantial market opportunity for those consultants who have the ‘right’ skills, knowledge and experience.

This means that in the future the focus should be on supporting the formation of a new generation of local ‘specialists’, with adequate functional skills, sector expertise and relevant practical experience to serve the expanding needs of growing companies in Kosovo.

Moving towards the private market

However, moving from the 100% subsidized donor market to the free market with zero subsidies will require local consultants to adjust their business models to satisfy the demands of corporate clients rather than donors. This is a formidable challenge because the requirements of donors and private companies are very different from each other.

According to the companies, the large majority of consultants do not fulfill the requirements and they are deemed not to have the capacities to supply the services with adequate quality. The local consultants fall short for a variety of reasons, such as low technical skills, weak selling points, low confidence and lack of corporate references. There is also a general lack of trust for local consultants among the lead firms (CEED report, 2013). All of which highlight the need for consultants to improve their capacities in order to better match companies’ needs.

Consultant market change 2

The formal training module of HCDI (an EYE project initiative on human capital development) represents an opportunity for local consultants to strengthen their internal capacities, such as technical skills in HC development and Consultancy-as-a-Business skills, including a module on how to sell in your consultancy services. The Business Consultants Council (BCC) offers a range of business and skills development opportunities for their member consultants. Recent training topics include CMC certification, Business Diagnostics and Marketing and Sales of consultancy services.

BCC is also advocating for consultancy, as a profession, to be registered as an economic activity in the Business Registry. An official recognition of the profession will open up for relevant public and private bodies to design and manage an official accreditation system for consultants, which in turn will act as a guarantee for the quality of services that companies can expect from individual consultants. A more structured and transparent supply of consultancy services will contribute to reducing the general mistrust held by some companies about local consultants.

Also, consultants must take every opportunity to ‘get in the door’ of the companies, to accumulate practical consultancy experience. I was pro-active in selling in my services to Hospital American during the HCDI’s ‘Speed-dating’ event. I invested my time in completing the company diagnostics and together with my colleague from Macedonia we prepared a business proposal for HC consultancy services, which we presented to the company.” (Myesere Hoxha, Consultant, October 24, 2014)

As a result of the consultants taking a more pro-active approach to learning new HC and business skills, and spending more consultancy time in the companies (even free of charge), they will strengthen their capacity to present companies with an improved offer for consultancy services. In better matching supply of consultancy services with companies’ needs, and supporting the offer with references from other companies, the consultants will certainly be more successful in generating new work among the lead firms and other growing companies in Kosovo.

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About Jakob Modéer

22 years of corporate and international investor experience as well as private sector development project management, consultancy in private sector policy and business advisory services, and direct consultancy to companies in South East Europe (and now a blogger on socio-economic issues)
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