A review of expert forecasts for the management consulting industry in 2019.
Widespread changes are occurring in the management consulting industry. Various analysts and surveys have highlighted the trends that are affecting all aspects of the industry. These trends include changes in business models, billing structures, skill sets and the selection of consultants. Below is a review of the forces set to reshape consulting in 2019.
Trends for 2019
Changing Service Models
What defines a “consultant” may be evolving. Various firms have studied this evolution and have provided analyses of the change. ALM Intelligence, a firm that advises the consulting industry, created a webinar that focused on how the industry is changing. Within this presentation, they highlighted that consultants are no longer being considered isolated experts, but are instead becoming part of a more collaborative set of services, whereby they can work with a multitude of other service providers in order to attain a common goal for a client.
In a survey of consultants by Sioo, they concluded that there are three models of consulting services that are now emerging. These models include collaborative consulting, continuous consulting and instant consulting. The collaborative type is defined as low-cost advisory services from an array of consultancies and service providers (similar to what ALM Intelligence had reported). Continuous consulting is the offering of tools and services to a firm in order to help that entity achieve continuous revenue. Instant consulting involves immediate insights from a service provider after a short amount of research.
Increased Competition & Continuing Commoditization of Services
The freelance, or “gig” economy, continues to affect the consulting industry. Today, online marketplaces of readily available experts can be accessed with a few clicks of a mouse. Clients now have a multitude of options when seeking advice.
In fact, Hinge Research Institute’s survey of consultants found that a highly competitive environment is a top concern. Larger consultancies, as well as cutting-edge start-ups, are seen as potential threats to mid-sized firms, according to the study.
Changing Vetting & Discovery Process
The way that clients choose consultants is changing. Hinge Research Institute found that this trend is a concern of consulting firms. More entities that perform research via an Internet marketplace can be quite attractive to potential clients because of the speed and low cost of some of these providers. By just using a few filters and sorting commands, a potential client could find a subject expert rather quickly on such an online service.
This rapid desire for advisory insights is also supported by Sioo’s survey, whereby they concluded that “instant consulting” is increasingly being desired by clients. Author Pat Lynes also reiterates how disruptive the freelance and informal methods of finding consulting help can be. The decades-long reputation of an established firm may not necessarily be the deciding factor anymore when selecting a consultant.
Such trends are also supported by research from Callbox and CBI Insights, whereby they report that many firms are building internal groups of former consultants to have in-house teams. Lynes also described the trend of internal “SWOT teams” of experts at given companies, assembled so that these companies do not need external consultants. With this model, there is no need to search for or vet outsiders, because the expertise is already inside the company.
Price Competition & Concern for Return on Investment
Clients continue to be price conscious about advisory services. Freelancers working out of their homes, with little overhead, may be able to quote a price much lower than a multi-million dollar consultancy. Even billing models are being disrupted because of pricing concerns of clients. Firms are seeking more return on investment and “proof” of quality. Traditional hourly billing may not be suitable for such clients.
Hinge Research Institute’s survey provided some insights regarding this pricing sensitivity trend. They stated that there is a downward pressure on prices due to the competition of a multitude of services and online tools for information discovery and advisory. Some consultancies are providing added value technology, like artificial intelligence, with their advisory services in order to differentiate themselves within the pricing ecosystem, according to the study. Other analysts, such as Callbox, state that the move toward value-based billing may not be coming quickly enough, however, because clients are still verbalizing their desires for outcomes-based pricing.
Never Ending Need for New Skills & Innovation
The fast pace of innovation is affecting many industries, and consultants strive to be the experts of this cutting-edge knowledge. The very nature of the rapid changes, however, can be a struggle for many consultants. In fact, CB Insights states, “The increasing pace of technological change means that more and more, consultants’ recommendations are out of date nearly as soon as they’re made.”
Hinge Research Institute’s survey also supported the existence of this trend. They label the need for constant education as “unrelenting,” and report that most consultancies either hire such skilled talent or train existing employees to learn new skills.
Conclusion
Overall, industry-wide agility and productivity are needed for success in the consulting industry through 2019. Both clients and consultants agree that competitive pressure on price, speed and skill will drive the industry. Knowing these factors may aid consultants in their goals to be successful in this increasingly competitive environment.
Click here to check out InfoDesk's 5 key trends for the consulting industry in 2023.
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