What do artificial intelligence (AI), the Cloud, the Metaverse, sustainability and diversity have in common? Allow us to introduce the consulting industry’s key trends for 2023.
In last year’s edition of our key trends in consulting blog, we focused on ongoing trends accelerated by COVID-19. Specifically, the pandemic introduced a critical demand for adaptiveness, in turn producing an unprecedented explosion in digital technology. As a direct result of this, the global consulting space has thrived, exhibiting a growth rate of 4.1% in 2022 alone.
If this industry boom is to continue, however, consultancies must strive for ultimate modernization. Below, we’ve uncovered the 5 key management consulting market trends that will influence the professional services market in 2023, ensuring firms remain competitive and future-proofed.
1. AI and digitization for improved business performance
Across every industry, demands on the capability and scalability of technology are growing. In response, consultancies are continually looking to optimize their tools, leveraging AI to automate manual, monotonous processes. According to a recent survey of IT leaders, automation promises a number of key benefits, including driving time-efficiency and cost-efficiency. As such, 21% of survey respondents consider process automation to be a high priority, and this proportion is only set to rise. Recently, global consultancy Deloitte launched the Deloitte Centre for AI Computing to accelerate the development of AI solutions for its clients.
The consulting space has also observed an ongoing drive for digitization, unlocking a myriad of opportunities that drive data sharing – and data gains value when it is shared. In order to deliver exceptional client service, consultancies must be able to share the right insights on key accounts, the competitive landscape and wider industry. According to Gartner, organizations that promote data-sharing will outperform their peers across most business metrics in 2023. Consultancy Ernst & Young (EY) has already made a major investment as part of their digital transformation, with $1.5B being put towards audit quality and innovation projects, technology solutions and strategic alliances.
What does this mean for consultants? Ultimately, the drive for digital will empower analysts and intelligence teams within consultancies to have an improved decision-making workflow, offering their clients a more efficient service. This ongoing trend will continue to gain traction through 2023, perpetuating high demand for consultants who specialize in AI-driven automation and digital transformation.
2. Expanding Cloud capabilities
With more than three quarters of firms now offering hybrid work, this trend is only set to continue through 2023. This will increase the demand for flexible and scalable Cloud-based solutions that enable companies to offload business processes to the Cloud and maximize the storage and analysis of data, ensuring they can operate effectively and competitively. As a result, the professional services have seen a boom in clients seeking advice on Cloud adoption, seeking to expand their Cloud services capabilities through investments, acquisitions and collaborations. Forecasts from Deloitte indicate the Cloud’s market value could grow to $60 billion within the next 5 years, with approximately one third of companies’ technology budgets now spent on Cloud services.
So, how is this trend evolving? Critically, the deployment of Cloud applications is fast becoming a process of modular assembly rather than in-house creation, as Cloud developers build suites of solutions, accelerators and APIs preconfigured for specific verticals. A report by Deloitte predicts businesses will continue to explore how these industry-specific Clouds align with common use cases, enabling them to refocus resources on their own competitive strategies to drive efficiency and opportunity.
What does this mean for consultants? As companies increasingly turn to Cloud over traditional IT models, professional services will continue to build their Cloud offerings to meet this demand and look to hire specialists in the field, whilst existing consultants should expect more training in the use and adoption of Cloud-based technology.
3. The expansion of the Metaverse
The Metaverse is the next evolution of the internet, challenging the status quo of business technology and transforming the way in which companies manage their employees, customers, operations, workflows, products and services.
Looking ahead, the Metaverse is only expanding, with its global market value set to grow almost 50% year-on-year from $100 billion in 2022 to more than $1,525 billion in 2029. Accenture predicts that soon, most major companies will have constructed their own Metaverses, enabling employees to truly work from anywhere.
So, why the buzz? A recent study by Accenture reported that 71% of business leaders feel the Metaverse will positively impact their organization, while 42% believe it will be nothing short of transformational. In order to keep up with competitors, firms must act now, making the necessary investments into digital transformation, partnerships, and API and Cloud infrastructures to participate in this Metaverse-first world. After all, as the Metaverse sits in its infancy, companies have a choice: to be pioneers at the forefront of its construction, or to be mere inhabitants of another creator’s vision.
What does this mean for consultants? The actions taken today will shape the Metaverse of tomorrow. With this in mind, firms should echo the actions of larger consultancies, not only advising clients to monitor the Metaverse landscape but proactively doing so themselves. Companies should spare no resources in identifying and acquiring the tools, partnerships and in-house skills required to drive Metaverse success.
4. Ensuring compliance with sustainability
Amidst consumer and investor climate concern, organizations are increasingly looking to align business models with decarbonization goals. Unfortunately, many mid-market firms struggle to calculate their carbon footprint, meaning their Environmental, Social and Governance (ESG) goals lack buy-in from senior management.
As a result, firms turn to specialist ESG consultants. The ESG advisory market is now one of the fastest-growing consultancy sectors worldwide – with a growth trajectory of 17% year-on-year from 2022 to 2027 and projected market value of $16 billion by 2027.
The 2022 COP27 conference attracted professional service firms such as Deloitte and Boston Consulting Group (BCG), who are advising businesses and governments on their ESG strategies. As well as advising clients, professional services are examining their own internal ESG practices; Deloitte, KPMG, BCG, PricewaterhouseCoopers, EY, Capgemini and LEK Consulting are just of some of the firms that are committed to carbon neutrality practices such as reducing business travel emissions and sourcing renewable energy for buildings.
What does this mean for consultants? Following the COP27 summit, we anticipate new laws and regulations in 2023 that will enforce businesses to reduce their carbon footprint. It is predicted that there will be more training for consultants on the changing scope of environmental rules, laws, and regulations, empowering them with the skills and knowledge to advise both their employers and clients of the changing environmental regulatory landscape.
5. Driving Diversity, Equity and Inclusion (DE&I)
According to research by BCG, DE&I is positively correlated with revenue, with the most diverse executive teams generating significantly more profit than their less inclusive peers. Surprisingly, however, financial benefits are no longer the key driver of DE&I initiatives. A recent report by global consultancy Sheffield Haworth claims that companies are instead now “leaning into the moral or ethical case for change”. This trend is reflected in the preferences of the workforce, of whom 67% seek employment at firms achieving high DE&I.
Consultancies must ensure that their DE&I initiatives effectively resonate with this talent pool in order that they might hire, integrate and retain more of the best diverse talent than their competitors. Here, Susan O’Sullivan, VP of Diversity, Equity and Inclusion for technology wholesaler Ingram Micro, offers a useful tip: ensure you not only select these top candidates, but involve your top diverse employees throughout the interview process, truly communicating a culture of deep-rooted inclusivity.
What does this mean for consultants? Consulting firms should take a practical, data-driven approach to increasing DE&I. By measuring and analyzing DE&I data, leaders can understand where current initiatives are falling short, and assess and improve the efficacy of resulting solutions.
Conclusion
In 2023 the management consulting industry will continue to grow… so long as it continues to modernize. Consultants are set to be in high demand, as the need to digitize proliferates with the widespread uptake of hybrid work.
As per the above management consulting industry trends 2023, consultants specializing in AI, digitization, Cloud and the Metaverse will play an especially critical role throughout the next year, both in futureproofing their own organizations and in supporting clients through their respective transformations.
Globally, ethical concerns for the environment and the workforce will continue to gain traction, so firms should also make every effort to ensure they are on the right side of these movements – laying the foundations for a more sustainable and equitable workplace of the future.
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