Management Consultancy: Efficiency for SMEs

Management Consultancy: Efficiency for SMEs

In recent years, thanks to the economic renovation by the government and important efforts by enterprises, the Vietnamese economy has maintained high growth rates. However, as international economic competition becomes fiercer, the continuation of the current growth rates is indeed a big challenge. To overtake counterparts in the region and the world, Vietnamese enterprises have to improve their skills and knowledge through training, accessing information sources, joining associations, and, in particular, receiving efficient consulting services from management consultants.

Like in other countries, there are several kinds of business assistance in Vietnam. Services, such as accounting, auditing and information technology, have been developed to meet the ever-increasing demand of the market. However the management consulting market (or management consulting services) remains undeveloped as it requires professional knowledge and methodical training. Furthermore, the enterprises themselves do not fully realise the benefit deriving from the consulting service.

Budding management consulting services

Most Vietnamese consulting companies are privately owned and the companies are often established by a group of individuals. They are small in size and symbolise the budding consulting service in Vietnam. Most consulting companies and independent consultants have been operating for less than five years. This is an understandable situation as the Vietnamese SME sector has only really developed in the past 10 years and the Vietnamese government only recognised consulting as a business service in 2002.

Consultants in Vietnam are providing various products and services. They can be divided into three main groups: strategic management consulting, specialised management consulting and business assistance services. However, the SME sector has not made proper use of the services provided by consultants in Vietnam. According to experts from the private economic development programme MPDF, the reason that SMEs rarely use the consulting service is because they do not see the true benefit of the service and consequently believe that they do not need it.

Challenges and forecasts

With the new Enterprise Law approved in 2000, the establishment of consulting companies has become simple. There is no major hurdle for consulting companies in Vietnam except human resources and development of a business network. The profession requires consultants with diversified skills in communication, presentation and analysis. They must also have a knowledge of management, particularly in the practices of the West. However, few Vietnamese have the chance to study the theory and practice of management in the West.

As mentioned earlier, most Vietnamese consulting companies are private companies, and consequently face similar difficulties and challenges to SME's. There are also constraints in the consulting service due to the legal environment, such as taxation related issues, regulations on hiring foreign consultants, access to information and personnel constraints.

Regardless of challenges in providing the service to the SME sector, the consultants believe that it is a potential market of the future. As State-owned enterprises continue to be equitised, private enterprises and joint ventures will become the main clients for management consultants. Consultants believe that as business competition becomes fiercer, private enterprises must be managed more professionally so as to survive and develop successfully. Evidently, the forecast shows that management consultants will have more opportunities in Vietnam in the future.

• Nguyen Thoa