It’s almost a decade since the Global Financial Crisis barrelled into consulting revenues, causing what was probably the single biggest downturn the industry has ever experienced.In the years that have followed, we’ve seen some markets recover more quickly than others (Germany compared to Belgium, for example), but through it all there’s been one constant—the importance of the US market. Now there’s signs that could be changing.
What isn’t going to change, of course, is size—the US generates almost half the world’s consulting fees. But more firms we’ve spoken to this year have talked about difficult trading conditions, bumpy top lines, and margins under pressure. In contrast, most of the conversations we’ve had with firms in Asia Pacific are bubbling with excitement and buoyed with investment. In both regions, digital technology and transformation is the impetus for growth, but clients we talk to in the US are starting to complain that they’re overwhelmed with consulting firms (and others) promising much but, so far, delivering relatively little. This hasn’t yet reached bubble-ready-to-burst proportions yet, but there’s spikes of resentment about the money that’s being poured into this space, and consulting firms would do well to start serving up some hard facts about the benefits achieved. Cybersecurity is casting an increasingly dark shadow over transformation projects, with concerns being raised that, in the race to engage their customers in the digital world, corporations may have opened the door to unwelcome visitors. In Asia, the type of industry disruption and business model reinvention associated with digital transformation is still new to many organisations. Companies that have been able to rely on growth are now also looking inwards to performance improvement. Markets where the cost of labour, once so low, is being pushed up by salary inflation, are increasingly interested in automation.
Of course, many parts of Asia remain difficult to operate in, especially compared to the US. And we shouldn’t make the mistake of treating the region as a single, homogeneous entity. The opportunities in India are different to those in Indonesia. China and Hong Kong may be physically close, but they’re poles apart as consulting markets.
But at the heart of this shift appears to be a greater willingness in client organisations to use outside help. I’m studiously avoiding saying that they’re more willing to use consultants, because it seems to me that it’s the convergence between people and technology, that’s the key here. It’s not the market that’s changed so much as the consulting process—and that’s going to open up huge new opportunities in the next few years for consulting firms that are willing to create solutions that integrate traditional consulting advice with software tools.
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Fiona Czerniawska is a leading commentator on the consulting industry and a co-Founder of Source who provide specialist research on the management consulting market to consultants and their clients.
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