Internal management consultancy emerged as an alternative to external consulting and grew considerably in the 1990s – parallel to but with a delay in relation to external consulting growth. Looking at the often considerable expenses for external consultants, many large firms searched for less expensive sources of organizational analysis and established internal consulting functions. In some cases, internal consulting firms were newly founded as additional units or subsidiaries. In these cases, new personnel were predominantly recruited from renowned external consulting firms, offering them equally interesting analytical tasks, less traveling, and less overtime work than in external consultancies. In other cases, internal units such as “Organization,” “Corporate Development,” or “Corporate Planning” were renamed as internal consultancy departments, expanded, and given more responsibility and tasks. In these cases, most of the personnel of the former department or staff function were carried over and only a few additional consultants were hired from outside.

The point of founding internal consultancies is not only to save costs. Two additional reasons come into play. First, an internal consulting firm, possibly founded as a subsidiary, is also meant to be a source of additional revenue. If the internal consultancy has overcapacities, their services can be offered on the market. Hence, internal consulting firms are often conceived of as competitors to external consulting firms, both for analytical work within the firm and – sometimes but not always – for contracts in the market.