● Although COVID-19 is likely to disrupt the market this year, the all-important technology consulting market will fare better than other types of consulting during the COVID-19 pandemic, with a contraction of just 4% expected
● The dominance of technology consulting in the US also means the US market will contract less than most other consulting markets globally...
Demand for digital transformation projects drove growth of 6.6% in the US consulting market in 2019, finds a new report published today by
Source Global Research. Though the market is now worth over US$73bn, this is the slowest growth rate the US market has seen in six years. Fears of an economic downturn, combined with a host of macroeconomic and geopolitical issues, led to this deceleration.
The COVID-19 crisis
As expected, COVID-19 is widely disrupting the global consulting market, and the US is no exception. Source forecasts that in a worst-case scenario, the US consulting market could contract by as much as 16% over 2020. However, please note that this forecast is updated weekly, and has already improved significantly over the last eight weeks. Other consulting markets that are expected to fare worse than the US include Germany (contraction of 17%), and the UK (contraction of 21%).
Source expects that demand for digitisation—which has been the primary driver of consulting work in the US in recent years—will not suffer as much as other consulting service lines. As a significant beneficiary of the demand for digital, technology consulting will fare much better than the US market as a whole, with Source estimating this service line will contract by just 4% over the course of 2020.
This is one of the more positive stories to emerge from the COVID-19 crisis, and it is largely thanks to the resumption of digital transformation projects that were put on hold early in the shutdown. As clients have increasingly realised the changes they were planning before the crisis are now even more urgently required, those that are able have been eager to resume work. Technology consulting is also being buoyed by a surge in demand relating to workforce planning.
Source predicts that demand for technology consulting may even grow in some sectors, most notably in pharma and TMT, but also in the public sector. Pharma and TMT are likely to be the two least impacted areas of consulting in the US market, as these sectors race to keep up with intense demand for their products during the crisis, and can afford to use consultants. The high-tech and telecoms consulting markets have, in particular, been boosted by the huge shift to remote working and the infrastructure changes required to enable this.
Fiona Czerniawska, Managing Director and Founder at Source Global Research, said:
“The US market is by no means out of the woods, but prospects do look to be improving there, as many states move towards lifting restrictions, paving the way for greater levels of economic activity.”
Other services that will hold up best as COVID-19 plays out:
In addition to the relative resilience of technology consulting, Source Global Research predicts that the following services will hold up best even as the consulting market inevitably shrinks across the board in 2020:
- Operational improvement: There’s been a surge of demand for supply chain support, which is now being accompanied by activity around cost-cutting. Initial projections suggested this service line could contract globally by as much as a third over the course of the year, but Source is now predicting it will contract by about a fifth in the US.
- Workforce planning: The latest example of a multidisciplinary service, consultants are seeing a surge of interest from clients looking for help organising their changing workforce. Much of this demand is falling to the operational improvement and technology service lines.
- Risk & regulatory support: Clients are looking to consultants to help them keep compliance initiatives ticking along while they reposition their own resources to focus on other things.
Fiona Czerniawska of Source Global Research, concluded:
“The continuation of existing digital transformation projects and the commissioning of new supply chain and cost-cutting work will all depend on clients’ confidence that such projects will yield results. Never has consulting firms’ ability to deliver—and deliver far more quickly than their clients can—been more important. However, despite what looks like a gloomy picture at the moment, consultants are hugely adaptable and we are confident that firms will find opportunity where and when it presents itself.”
For more information on Source reports contact
lindsay.stark@sourceglobalresearch.com, telephone +44 (0)20 3478 1204, or visit
www.sourceglobalresearch.com.
