Mohanbir Sawhney is the McCormick Foundation Chair of Technology at the Kellogg School of Management, where he also directs the Center for Research in Technology & Innovation. He has advised two companies mentioned in this article: Littler and EXL.
High-end professional services firms that cater to corporate clients have a clear upside: Because they provide specialized expertise, their offerings can be very lucrative. But there’s a less obvious downside: If a consulting firm, say, or a law practice wants to double its revenue, it has to double its staff of consultants or attorneys.
Consultancies, law firms, ad agencies, and other professional services firms struggle to nudge their gross margins above 40% as they achieve scale. Contrast that with product companies like Google and Adobe, which don’t have to deal with the same…
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Harvard Business Review (Digital) - 1 Issue, September 2016