Latest Trends in the Consulting Services Industry
The consulting services industry is experiencing incredible growth due to the upheaval caused to people and processes by fast-paced technological developments, political uncertainty, the regulatory landscape and risk management.
June 05, 2018 | By Lara Doyle
The Big Four—PwC, Deloitte, EY and KPMG—account for nearly 40 per cent of the industry’s estimated $155 billion global worth. They look set to cling to their market dominance for the time being, despite being associated with tax avoidance scandals in recent years. This is largely down to their sheer size, global reach and household names, making them the first port of call for businesses seeking consulting expertise.
However, disruptive technologies and emerging competitors are challenging their long-term market hegemony. The growth in the consulting services market is largely being driven by the race to digitalise by businesses of all sizes. Uncertainty due to political events such as Brexit is also a factor as well as the increasing complexity of regulations such as General Data Protection Regulation (GDPR), which while a European Union (EU) legislation, will have international repercussions. Risk management remains a major source of growth, which includes increased pressure on cybersecurity to fight fraud and protect data privacy.
These emerging consulting services competitors are impacting the modus operandi of the industry in general, driving new trends that are shaping the core functions of the industry.
The changing nature of the consultancy—client relationship
As in all industries, customer experience is affecting business strategy for consulting services. Customer expectations are forcing the market to adapt swiftly to the changing times. Fiona Czerniawska of Source Global Research says that frictionless delivery will be a trend to watch out for in 2018.
“It’s a rare consulting firm that puts itself in its clients’ shoes and sees just how sclerotic some of its processes have become,” she says.
“And that matters because most of the high-growth opportunities in the market (think digital transformation, cybersecurity, customer experience, and data and analytics) all require some degree of cross-practice working.”
A LexisNexis industry report sites multisourcing as a growing trend. Instead of retaining the services of one consulting firm to manage all the elements of a project, businesses are preferring to retain multiple consulting firms with niche specialities and expecting them to collaborate on the successful outcome of a project.
MarketResearch.com echoes this finding and adds that consulting service firms are also becoming modularised as clients are preferring to pick and choose from a number of components with individual pricing that can be executed in house. Modularisation of services is particularly popular where a single service firm is not able to handle the complexities of a bigger project.
In the Global Consulting and IT Service Providers Trend Report, author Kumar Parakala writes about co-creation with clients. “Consulting and IT service providers will increasingly be expected to create solutions in close cooperation with clients. Elite consulting firms are currently leading the way with co-creation solutions.”
Adoption of digital technology
Consulting services are launching and enhancing their social media and content marketing presence, according to the Professional Services Market Global Report 2017. They are doing so in order to find and engage with clients online, to market their services and monitor their competitors. The growth rate of social media adoption within the industry is aligned with global internet adoption and online communication and helps consulting services to improve brand awareness, increase their client base and boost client satisfaction.
While artificial intelligence remains as much a hot topic in 2018 as it was in 2017, consultants can rest assured their jobs won’t be displaced by robots (just yet). However, consulting services firms are actively implementing automated back-office functions in order to improve the customer experience and relieve office workers of laborious back-office tasks. Automation reduces costs, improves customer service and allows for better oversight of trends affecting the clients’ business.
“New technologies that automate certain consulting functions will increasingly be viewed as an important complement to the skills of the professional consultants,” says the aforementioned LexisNexis report.
The virtual office is also being realised by the industry, enabled by rapid technology deployment, pressure to reduce costs and the proliferation of the smartphone. By placing the office infrastructure in the cloud and relying on contract consultants (see The future of talent below), the consulting services industry is able to reduce costs for themselves and their clients while maximising growth.
The future of talent
The gig economy (a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs) is a growing trend in the consulting services industry, which traditionally nurtured the cream-of-the-crop employees for the long haul.
However, in such a strong growth market, the war for talent is real, and finding and retaining top talent will continue to be top of the agenda at consulting services firms.
Fiona Czwerniawska says, “[We’re] hearing the first rumbles of discussion around how, in a world in which at least some of the work done by junior consultants is automated, the talent model needs to change.
“Most firms are optimistic, confident that a combination of reskilling and changes in recruitment will allow them to navigate waters brimming with potential reputational damage.”
Innovation, agility and the willingness to adapt
As the consulting services industry grows and the pressure to reduce costs by those seeking their services increases, the scale and brand of the consultancy are playing less and less importance. Clients are seeking innovative and cost-effective solutions, and speed and flexibility are important factors in winning work.
Small-to-medium consulting services firms are challenging the bigger, more established firms with their ability to innovate and their agile pricing and service models.