The increasingly competitive development landscape is changing through mergers and acquisitions, affecting not only iNGOs but also major development consulting firms in order to cut costs, maximize value for money and deliver better services to their clients.
Australian global development management company GRM International announced on Tuesday that it would be absorbing U.K.-based development consultancy outfit theIDLgroup as part of the GRM Futures Group in response to a call from clients to “enhance our service offerings and … demonstrate value for money from taxpayer investments in foreign aid,” GRM Regional Director for Europe, the Middle East and Africa Charles Duff told Devex.
TheIDLgroup, he explained, “allows us to better meet the needs of our clients as well as the beneficiaries of the programs” and has an “extremely good reputation” with the British aid agency DfID as well as with AusAID.
Both groups had already worked together on projects in Nepal and Nigeria, and theIDLgroup believes “integrating … will enable us to leverage our skills and expertise,” noted Terry Green, managing director for theIDLgroup.
So how did they come together? Duff said GRM has always been and continues to be open to new alliances, while according to Green, the IDLgroup had been approached by several firms in recent years but “we already knew GRM quite well … [and] concluded that it was the right time for us … to consider this type of partnership.”
“In the U.K., the market has changed and there is now a more structured procurement processes, including frameworks. While [we have been] successful in winning a place on many frameworks and supplier panels, it is a challenging environment for smaller firms,” explained Green. “Moreover, wider opportunities arise from being part of a larger group … and that was an important consideration for us too.”
Complementing business models
GRM, with almost 50 years of experience delivering mainly rural development services around the world, stands to benefit from theIDLgroup’s wide portfolio, in particular forestry and environment where GRM wants to improve its capabilities.
Green said GRM’s sole focus on international development will allow theIDLgroup to “stay true to this core of who we are,” while the larger organization’s project management expertise and support infrastructure are both expected to produce economies of scale for delivering better results.
As for how the new synergies will affect the merged firm’s structure, operations and staff, Duff explained that all of theIDLgroup’s executives will stay on and support GRM management in key areas. Green added that all short-term contracts will remain unchanged and managed by the same individuals, and no major staffing changes are expected because the business models complement each other rather than overlap.
Just two years ago, the current GRM structure was born from the merger of GRM International and the Futures Group just over two years ago. The smooth transition that ensued compelled the firm to seek more partnerships, in what is becoming a trend within the development community.
Private development firms, noted Duff, are pursuing mergers and acquisitions for the same reasons as iNGOs: diversifying client base, enhancing services for clients, creating opportunities for employees and helping more people in need. And in this increasingly competitive environment, one must for instance be prepared to deal with the tough reality of the dwindling foreign aid budgets of traditional donors like the United States, the United Kingdom or Australia, currently the top clients of both GRM and theIDLgroup — but Duff doesn’t seem to be worried.
“We expect that significant resources will continue to be invested in development work through bilateral donors, and we expect that aid programs will continue to be the core of our business,” he said. “At the same time, we also continue to explore new and growing partnerships with other clients, including the private sector and foundations.”
The private sector, Duff concluded, needs to be more engaged in furthering global development goals, as it continues to be a “significantly untapped resource with tremendous potential.”
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