Iranian consultancy NikKhah says US sanctions a double-edged sword

22 August 2019 4 min. read

Iranian business advisory NikKhah Consulting has spoken to about the current state of the local consulting industry – contending that recent US sanctions have proven a double-edged sword.

“Buoyed by the lifting of sanctions in 2016, many are expecting the Iranian economy to experience a significant boom in the near future. For this success to be sustained, solid foundations need to be established, and reforms in major industries will likely be aided by the (much needed) experience of consultants. Eyeing a prize that we assess to be worth somewhere in the region of $850 million, large and small consulting firms are lining up to enter this emerging market.”

That was the forecast from industry research consultancy Source Global Research just two years ago, when the market stood at only $6.4 million. Then came Donald Trump. Seemingly orchestrated by returning foreign policy hawk John Bolton as an act of provocation, Trump inexplicably withdrew the United States from the Iran nuclear deal (described by leaked UK cables as an act of ‘diplomatic vandalism’) and has been steadily upping US sanctions ever since.

Amir NikKhah, Founder of NikKhah Consulting

Those sanctions, says Amir NikKhah, founder of local advisory NikKhah Consulting, have proven a double-edged sword for the management consulting industry of Iran. On the one hand, NikKhah contends, many companies have become more interested in consultants because of the various crises their organisations are facing thanks to the sanctions, but on the other hand, companies are finding management consultants ineffective due to the harsh current conditions.

These conflicting issues are in effect even more pronounced for NikKhah Consulting. Founded in 2013 and based in Tehran, NikKhah in addition to providing management and business consulting, training, market research, and marketing and sales consulting, is also a local leader in export and import consultancy – an area which sits at the heart of the sanctions, with US attempts to apply pressure on other nations to block trade undermined by a range of complex loopholes.

Irrespective of the sanctions, NikKhah believes that while the local management consulting industry is approaching world standards (having emerged in its current form over recent decades and aided by a renewed rise in communications between Iranian and international consulting firms), it still has some way to go – due to range of ongoing challenges at both the employer and contractor levels. Among these is the cultivation of local consultants, a path still undefined.

“So many college graduates are entering the industry thinking they can give advice to companies,” says NikKhah, who earned his MBA with the Tehran University of Economic Sciences in 2016 and is now perusing his doctorate in business administration after a long entrepreneurial career. “A consultant who does not have executive experience can neither provide operational solutions nor gain the trust of the organisation’s personnel.”

As it stands, NikKhah estimates that there are over 700 management consultancies currently operating in Iran, 70 percent of which are run by a maximum of two people and only 15 percent experiencing over 10 billion Rial in annual turnover ($300,000). He says that a review of the local industry over the years can highlight the different circumstances of the country during that time. Currently, strategy, systems, human resources and marketing are the segments most in demand.

But other barriers still exist in terms of market development. “The performance indicators for the consultants have not been properly explained,” NikKah contends. “Many companies simply view increasing sales or reducing costs as a performance indicator of a consultant in an organisation.” Meanwhile, however; “Many consultants are incapable of understanding the critical state of the organisation and will offer long-term suggestions when an urgent solution is needed.”

Whether the local industry can achieve its $850 million promise over the short or longer-term remains unclear, at least while the current American administration is at the helm. Another snippet from the 2017 Source Global report demonstrates the unpredictable landscape; “Trump is viewed, above anything else, as a business-savvy pragmatist, and many in the Iranian business community believe he’ll be unable to resist the huge economic opportunities that opening up relations with Iran will bring.”