When times are good for consultants, they are good indeed. When they’re awful, however, they’re dreadful. The consulting industry is a diverse one. The most well-known type, strategy consulting, is also the most contentious. Many businesses have a negative impression of the high-paid consultants who come in and tell them they need to re-invent themselves. Spending on strategy consultancy is predicted to expand regularly year after year.
Work that is more mundane, on the other hand, is thriving. Between 2010 and 2021, it expanded by 5% per year, IT consulting by 3.9%, and people consulting by 4.0 percent in USA.
Western Europe seem to be satisfied as well. Companies are now brimming with MBA-holding executives, many of whom were previously consultants. Strategy consulting is far from dead because well-run businesses still recognize when they want outside assistance. However, the less glamorous version is quickly overshadowing it.
It’s no surprise that the strategy firms are fighting for the job. The top 5 Consulting firms have been acquiring expert enterprises in fields like technology and health care, thereby increasing their size and reach in terms of both specialization and location. They are not allowed to market consultancy to their audit clients in the United States. However, the constraints are looser elsewhere, potentially providing the Top 5s a “one-stop-shop” option. They have size everywhere, which impresses clients. Those clients, on the other hand, are pushing for tougher terms.
Most consulting firms have linked a large number of junior consultants to projects with only a few senior individuals and partners in the last two decades, putting this army inside clients’ offices and charging for as many hours as feasible. Clients are increasingly refusing to pay for on-the-job training for junior personnel. Instead, they’re asking for fewer, higher-quality consultants to work alongside their own employees.
In summary, consulting is beginning to resemble temporary labor rather than a license to print money. Clients can employ consultancies. Smaller consulting firms and large consulting firms (with their big brands) can definitely coexist. Midsized businesses, on the other hand, are feeling the pinch since they can’t command the same fees and loyalty as the big players.
Consultants are following a trend that has already impacted the law firms whose economic model they originally imitated. Clients want good value for their money. Consultants who provide useful advice will continue to prosper. But, here’s some advise for the rest: in a more competitive market, those who believe they can wow a customer with PowerPoint presentations and bill him by the hour forever will starve.