The massive management consulting industry continues growing, but not without pain. It has yet to integrate big data or automate processes, making it scalable only as qualified individuals continue to move into the industry. While 2020 and 2021 saw the sector dip its proverbial toe into high-tech waters, it needs to enhance its digitization in numerous areas in 2023 to continue its unprecedented growth.
These top ten trends and top ten statistics in management consulting will apprise you of the areas your consultancy must focus on to continually grow and land new clients.
Top 10 Trends
Continued Digitization
Expect continued digitization and a digital response to the growing need to adapt more quickly to client needs via operations, structure, and terms of service. While management consulting continues as a labor-intensive business service, other industries have already moved to digitization. Consulting services have just begun to shift from relying on humans for research, analysis, process, management, and facilitation. This trend will transform consulting from its current billable hours and time-based business model into a flat-rate system.
Legislation Shaping Business
Legislative legislation changes affect how UK and US management consulting do business. In the UK, Brexit continues to affect business conduct. In the US, continued decisions in work for hire and intellectual property, as well as “claims made” vs. “occurrence” liability insurance coverage, continue to affect day-to-day business conduct. These legal issues must be clarified so the business can run smoothly.
Market Focus
As management consulting grows, it continues to split into two market divisions – one, a low-cost, commoditized sector and, two, a high-value, specialized consulting sector. This division forces each consultancy to devise ways to address both markets, causing a transformation in the areas of business models, pricing structures, and brand architecture.
Digital Integration
Management consultancies continue to experience coping issues with digital technologies and the new business models that have developed. As a result, the 2023 trend will be for consultancies to create comprehensive digital strategies and revamp the existing business and operational models in a manner that continues to connect the C-level with stakeholders.
Fail Fast Methodology
Consultancies will adopt an agile development mentality leveraging the “fail fast” notion. While digitation comprises part of the business growth, the industry will continue to realize that money on its own does not buy innovation. While kaizen typifies most manufacturing lines today, the management consulting industry will continue to adopt relevant pieces of its tenets to adapt to the growing automation and changes in business models and operations.
Recruiting New Talent
Recruiting new talent continues to move from traditional top-tier universities to focus on skill sets. While a Bachelor’s degree continues as an entry-level requirement, consultancies look past only the top few schools’ graduates instead of investigating who has the complete skillset. Recruiters discover people through presentations and posters at relevant academic conferences and from those completing internships in the area. As retention becomes an issue, consulting firms will continue to move from a people to a product standpoint.
Multi-sourcing Mode
Both a challenge and a trend, the management consulting industry continues moving into a multi-sourcing model. This refers to them working with niche firms and other similar consultancies. Multi-sourcing takes many forms, including large generalist firms partnering with small niche specialists; management consulting firms partnering with consultants outside the industry; consultancies partnering with academics, digital agencies, and technology companies.
Crowdsourced Talent
These partnerships bear similarities to but differ from crowdsourced consulting firms, a disruptive business model that lets clients hire piecemeal from niche firms or freelancers that quickly turn around necessary products and services to them with little to no overhead. Crowdsourcing beats large firms on price, turnaround time, and, often, quality.
Consulting Firm Selection Process
Related to that, clients have changed the method of vetting and choosing consultants. They now use online services that let them perform research to determine which consultancy best serves their needs. The speed of these services and the decreased cost of leveraging these Internet databases concerns many larger consultancies since it makes it easy for clients to quickly find a subject matter expert (SME). It eliminates the “who you know” aspect and referrals and reduces hiring to pure expertise. It also removes the reputation aspect of choosing a consultancy. An established firm with a reputation that required decades to build may be passed over for an SME with specific knowledge. A related trend is that of building in-house teams from former consultants. These internal “SWOT teams” eliminate the need for external consultants.
Continued Education
Between changing business models, digitization, freelancers, and SMEs entering the competitive field, business management consulting continues to require new consultants and analysts with developing skill sets. These individuals can continue to burgeon innovation in the area and meet the pace of technological change in the industry. All individuals in the room must transition to constant education if they do not already adhere to a continuing education mindset. This education relates to more than their specific knowledge area and includes embracing new skills such as extensive data analysis, data mining, data cleansing, and data strategy.
Management Consulting Stats and Growth Projections in 2023
The old saying goes, “It is all about the numbers.” The transition to 2023 differs in no way. So here are ten must-know statistics on the topic of management consulting.
- Today, the management consulting industry has a net worth of $250 billion. This massive, highly profitable industry continues to grow globally, with industry hotspots in the UK and the US.
- Globally, more than 700,000 consulting firms provide a range of services, including general consulting and those focusing on niche topics such as finance, information technology (IT), human resources (HR), operations, strategy, and taxation.
- The UK continues to enjoy some of the most rapid growth, nearly four times faster than the UK economy in 2015. In 2016, it grew 8.2 percent from £6.02 billion to £6.79 billion. The growth trend has continued and should continue to do so in 2023.
- The US management consulting industry exhibited similar growth, growing 7.7 percent to $55 billion during the same period. In the US, the trend toward businesses leveraging consultants, thus causing industry growth continues.
- The largest consultancies, known as The Big Four – Deloitte, EY, KPMG, and PwC – outperformed high-growth and overall consulting markets. Those four consultancies exhibited a growth of 11.5 percent to £2.55 billion.
- Globally, the management consulting industry also continues to grow. In the past year, it exhibited a 4.1 percent growth rate. Expect this to continue as niche consulting firms pop up to serve clients locally and as the freelance consulting industry grows online. In addition, the cloud provides ready access to SMEs in virtually every topic.
- The job growth rate in 2023 for management consulting and analysts is 14 percent, much faster than the average job outlook.
- 2023 continues as a growth year for the management consulting industry. While the US and the UK exhibit the fastest and most significant growth rates, the DACH region of Europe isn’t far behind.
- Of course, far more challenges and opportunities exist for the industry. Adjusting to digitization presents its most significant challenge. While many industries, from marketing to healthcare, utilize big data and business automation processes, as discussed, this has not reached management consulting yet. This transformation must occur for the industry to continue to grow. As other sectors grow by leveraging automation, those consultants directing business processes cannot remain behind the times.
- 2023 needs to provide a swift transition to modern ways for the industry to continue its expansion. An overreliance on humans has created the need for consulting firms to develop new talent recruiting methods. The pool of qualified candidates remains small, and reliance on human workers only makes inflated costs to achieve completed workloads. Leveraging big data to grow their businesses and devising ways to leverage it for clients leads to better decision-making overall.
- The management consulting industry must develop its big data analysis techniques, including data mining using data lakes, data warehousing, and data modeling. In addition, its integration of automated analytics will speed up the business process improvement process.
- Until recently, the data management industry has dragged its feet in technology. That has caught up with it, and now the industry faces a do-or-die situation. The overarching most crucial trend will be using automation and big data to begin catching up with the industries they consult. This trend must continue perpetually for the industry to continue its runaway growth.