A recent study by management consulting firm A.T. Kearney found that 82 percent of global business executives are not positive about the economy, believing that economic volatility will intensify throughout 2015 into 2016. Such an economic landscape may spell bad news for banks, financial services and global conglomerates but it is certainly not holding back the consulting industry. In fact, a decline in business and the need to re-invent the wheel have given the consulting industry a boost. Companies rebounding from the 2008 to 2009 global economic slumber are now increasingly investing in new consulting projects in hope to reduce business cost and enhance operating profits.
Regional Growth of Consulting Firms
In particular, consulting firms with multi-cultural and multi-city presence are benefitting from this surge of demand for consulting. With the increased focus on South East Asia by many global conglomerates, consulting firms based in the region are now gaining popularity especially in the sectors of financial services, banking, oil and gas, healthcare as well as consumer and retail. The consulting sector is expected to expand to US$3.6 trillion in two years time.
Consulting firms based in certain regions are building a niche for themselves as well. For instance, in highly manufacturing driven Thailand, consulting services in the automotive and industrial sector are highly sought after. In Japan, there is an increased demand from businesses looking to expand their market outwards due to the country’s ageing economy. Top consulting firms are also eyeing economies such as China and India to expand their operations due to the increased work load against the lower cost local hires. According to the study by A.T. Kearney, global business executives are expecting India to attract more manufacturing with its seven percent economic growth rate. Already, top consulting firm Bain and Co. is opening an office in Bengaluru, making its Indian outfit the largest in Asia in terms of headcount. The firm’s Indian office is one of the fastest growing offices in the 34 nations where Bain operates. Arpan Seth, Bain’s Bengaluru Managing Director is confident that venture capital and private equity investments will end close to the highs of 2007.
Evolution of the Role of the Consultant
Despite the fact that the competitive consulting industry is already saturated with top talents from the Ivy Leagues, the popularity of a consulting career never fades. The consulting industry is heavily influenced by changes in their clients’ environment as well as greater competition in each particular industry. There has also been a shift of a consultancy’s role from traditional advice to implementation. As such, consultants need to evolve with the needs of their clients. Increasingly, consultants are also tasked to work in cross-border teams based on a “one firm” policy. This means that consultants based in different jurisdictions may be gathered in one team to work for a single client to reap the best efficiencies.
“With more cross border projects, candidates in the middle management to principal level are facing the pressure of heightened workload and increased travel. As a result, more candidates are also beginning to explore in-house roles. This creates even more opportunities for those keen on entering the consulting market,” said Thomas Greene, Associate Director, Professional Services of Space Executive.
In fact, consulting firms continue to actively hire at the senior management to partner levels with an inclination towards sector experts with more than 10 years in consulting.
Evolution of the Consultancy
One interesting trend that was observed in recent years is how in-house consulting arms are giving consultancy firms a run for their money. In-house consulting units have started offering consulting services to external clients as well. For instance, the Ritz-Carlton Leadership Centre, a unit of Ritz-Carlton Hotels educates clients on service standards and the Disney Institute by the Walt Disney Company advises clients on their customer engagement strategy.
However, it is not these in-house consulting arms that are causing top tier consultancies such Bain and Co. and Boston Consulting Group to worry. It is the Big Four audit firms which have jumped onto the consulting bandwagon that have upped the competition for these big strategy names. Deloitte is leading the game amongst the Big Four as it established its consulting arm since the early 2000s. In 2014, Deloitte’s consulting and advisory arm generated $17.6 billion in revenue. This is 76 percent more than its closest competition, PwC. With their global and widespread presence along with the ‘one-stop shop’ concept; it is no wonder that these firms are reaping the benefits of economies of scale.
Finally, one should also watch the consulting space for the rise of boutique and vertically aligned firms which are charging competitively for their consulting services. Usually established by experienced consultants from top firms, the streamlined nature of these consulting companies allows them to specialise in certain sectors, creating a niche for themselves. These firms have mainly thrived due to advanced technological resources and the availability of datasets.
Speak to our consultants at Space Executive if you would like to find out more about the emerging trends in this industry.