Is Your Firm Ready for the Future of Consulting?
As the world has grown in complexity, consulting firms have continued to flourish. This continued success has led many to conclude that the consulting industry is immune to disruption. The fundamental business model of consulting hasn’t changed in decades: outside experts come in to help companies do market research, diagnose big problems, and find solutions.
However, some businesses no longer want traditional management consulting firms to do their market research, leaning instead toward research firms like Gartner and Forrester. Today’s businesses don’t always want integrated solution shops on an engagement. Instead, they want modular providers that take on a part of the overall value chain. So while the traditional consulting model has stayed largely the same, clients have clearly changed. This shift may leave you wondering: what’s the future of consulting and which firms are most at risk?
Although Gartner reported that the worldwide consulting market continued to grow at a 6.1% rate in 2014, this growth is not distributed evenly. The top 10 consulting service providers grew in aggregate at a rate of 6.8% in 2014, and through a combination of organic growth and acquisition, they now represent 55.5% of the industry. These leading firms are in great position to command top-tier clients, and they have the reputation and resources to recruit the best talent. With no early signs to indicate a slowdown in growth, it’s unlikely that these firms will be abdicating their spot at the top of the food chain anytime soon.
On the opposite end of the spectrum, boutique providers have emerged, riding the modularization wave through specialization and alternative service models that disrupt consulting firms outside the top 10. Companies such as HourlyNerd promise access to premium consultants for not-so-premium prices. HourlyNerd connects businesses that don’t require extended engagements with freelance consultants who work on small to mid-size projects.
Firms like Eden McCallum and Business Talent Group (BTG) assemble leaner project teams of freelance consultants so that they don’t incur the burden of expensive offices and other fixed costs. Companies that aim to avoid the massive fees they might incur when working with larger consulting firms are giving smaller firms a long look. Additionally, numerous other firms have emerged, specializing in high-demand areas such as digital transformation, change management, life sciences, or specific phases of the typical consulting engagement. For integrated solution firms, this specialization is fragmenting the available market of clients.
So which firms are most at risk? Mid-size solution firms are feeling the squeeze from both the industry’s dominant players and the boutique firms that have emerged to fill in the gaps. Some leading mid-size firms have adapted or evolved, but many are still waiting on the sidelines to see what happens next. Unfortunately, time may be running out for firms that don’t embrace change. As Gartner put it in its 2014 Market Share Analysis of Consulting Services, “A consulting firm’s appetite for change, whether they are ready or not, must be ravenous; otherwise, they will lose revenue and be out of the consulting game faster than expected.” If you haven’t already started thinking about how to differentiate or evolve your firm for the future, it’s time to start now.
If you’re preparing your firm for the challenges of this new era of consulting, register for Consulting Magazine’s webinar on June 2: Digital Disruption and Consulting – Preparing Your Firm for Its Impact. Bullhorn’s own VP of Product Marketing, Bill Hobbib, will be one of several speakers, including consulting leaders from Deloitte Digital and Lyons Consulting Group. Register today to make sure you’re using the right strategies to navigate the technological sea change of consulting.
