Professional service industry will be impacted by the pandemic; however, it will be to test its service offerings rather than testing the industry itself. Consultancy.org estimates a drop in revenue for the North America consulting market of 15% from 78.7 billion to 66.6 billion. We have researched what is top-of-mind for executives as they navigate unchartered territory. Over the last two years, we have seen a growing trend of mediocre reviews and outcome from clients regarding consulting projects, but the events in Q1 2020 could help clear the dust for consulting services that could potentially excel or aid clients during uncertain times. The top five services that will provide the most beneficial impact for clients as they strive to return to a new normal are (1) cost reduction, (2) supply chain, (3) cybersecurity, (4) strategy, and (5) corporate transactions.
The main service that will be of focus for clients will be cost reduction. However, cost reduction will not be focused on the traditional cliché of head count reduction, rather will require consulting firms to deep dive into various forms of cost reduction that is sustainable and innovative. Cost reduction will be in many areas including back-office functions, operations, and even sales & marketing. As clients focus on daily operations to sustain day-to-day business, the main buying power will be held in the hands of procurement as corporation's tighten the protocols on consulting projects in the near term.
No doubt supply chain projects will pick-up momentum in the near term. However, this will also require much innovation rather than the tradition model of supply chain transformation projects. That is, it will require consulting firms to better understand the innovative products in the supply chain management process as consumers shift their purchasing decision influenced by the pandemic. For example, the trend of tracking the product from raw materials, suppliers, manufacturers, distributors, retailers to consumers will be of note for many consumer product industries. The main takeaway being, supply chain projects will be on the rise, however, they will be far from the traditional supply chain transformation projects giving consulting firms an opportunity to pivot the offerings to best suit the client's need in the next wave of project requests.
Even before the 2020 pandemic, cybersecurity was a growing offering given the market was set to reach $170 billion by 2020. The turn of events only solidifies the growth as we all learn to work, learn, grow, transact, and communicate using technology. The cybersecurity offerings for all consulting firms will see a steep rise as clients are looking to understand and implement the right protocol for their newly reconfigured business operations. The primary buyer for cybersecurity will remain in technology while procurement will also be engaged to drive the right results from a contract and cost standpoint. Cybersecurity offering could be the most resistant to new or smaller consulting firms, as incumbency drives so inherent trust in this space.
Market researchers have suggested that fundamental notion of consumerism will be shifted, mainly led by the millennial generation. For example, fast fashion which was facing much criticism leading up to 2020 now will have a harder path ahead as consumers shift to minimalism, proactive environmentalism, and conscious capitalism. Hence, the market dynamics will change having many to re-strategize their short-term and long-term plan. Strategy is not limited to consumer behavior, but extends to all revenue streams and operational models that are impact externally, and to some extent internally. Another example will be robotics, and the nature of artificial intelligence that will be incorporated as we practice a contact-less lifestyle. Hence strategy projects will be much needed for clients as they navigate what is next, but it is essential to realize that clients will be very apprehensive with generic recommendations, but rather will require much more in-depth and actionable research at the client and market level to best provide a strategy that is tangible and achievable. It is highly likely that clients will require the strategy to be executed, and the cost associated with that lifecycle will be discussed prior to engagement.
Depending on how the pandemic plays out: the outcome, the length, the government interference to temper the economic break, and the market itself, corporate transactions will become prevalent. Many will look to buy smaller companies, and mid-market might even buy start-ups to drive their competitive advantage as market shares become transferable between competitors. The volume and size of these transactions are driven by the above variables; however, consulting firms will see much activity in this space along with financial institutions. Restructuring projects will also be on the rise.
Above five service areas are most likely to grow in the coming six months to a year, but we recommend that the traditional offerings in this space are re-crafted to be most impactful to clients in order for both clients and consulting firms to reap the benefits. As noted in our previous post, result based fee structure, finite timeline, project by entire lifecycle, and increased amount of remote work will all play a role in these services. We are confident that management consulting firm will be able to serve our clients with the insight, tools, outside perspective, and impactful results that will serve as an anchor as consulting firms move into the next decade of innovative disruption.
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