The Savvy Client’s Definite Overview of the Consulting Industry Today
Did you know that the Consulting Industry today is one of the most dynamic sectors, and is projected to grow at around 6%, outpacing GDP in most countries? At this pace, the industry is expected to break the $300 billion mark by 2020. And even though the world is getting smaller as globalization blurs the distances, many Clients often hire their consultants within a 50 miles radius? Unsurprisingly they are missing the big picture, and to take advantage of the great opportunities and offerings, simply because their knowledge of the Consulting Industry today, is incomplete.
However, we are here to help. We have created a short List of 8 Major Features to give you an accurate snapshot of the Consulting Industry today.
Let’s get to it.
8 Main Features of the Consulting Industry Today:
Main Players Consultancies –
When you think about direct purchasing would you source from the local neighbors or take advantage of the global marketplace. Would you always use the same suppliers? You would probably play with some competition, to ensure you get the best supplier.
Consulting abides by the same rules, and the supply options are almost unlimited once you get to know the market.
Another good way to approach the complexity of the consulting market is to look at the size of the consulting providers. As a rule, large firms offer a broad range of services, while small firms tend to specialize in a narrow domain.
The bulk of the consulting providers are very small boutiques with less than 10 employees. In the US for example, they represent 87% of all Consulting firms. The remaining 13% of Consulting firms with over 10 employees, however, generate more than 90% of the total revenues in the industry.
Your winning RFP process has attracted a score of proposals. Once the elation of that bounty fades, you come face to face with the daunting task of selecting the winning proposal.
- Mergers & Acquisitions – Very Active Front
An interesting trend going on for the past 15 years, or more.
Every year since 2006, we observe roughly 500 acquisitions or mergers of management consulting firms of all sizes with larger players in the Consulting Industry. The reasons behind these moves can be to access in a new client base, to venture in a new capability or a new industry, or to strengthen an existing practice. The Consulting Landscape reflects that continuous M&A activity.
Compared to the average, the Consulting Industry has 60% less small firms between 10 and 50 employees, and almost three times more firms over 500 employees.
The Consulting Industry is clearly a large market with robust growth.
- Levels of Consulting Offering –
Interesting to note that the scope of “consulting services” continues to expand. The top-level offering is highly skilled advisory with a proven reputation and higher fees. The 2nd level of Consultancies is made of specialty niche technology services that have a specific price range. And the 3rd level comprises of highly skilled niche experts hired on specific projects.
- Digital Age Disruption Trends –
The consulting industry in 2018 was shaped by 3 major trends: Digital transformation, Technological disruption and Cultural shifts within the industry due to globalization. Right now, 2019 promises to be an interesting year as well. The expertise topics offered to Clients expand and multiply even further, in niche markets. Digital agencies and Consultants capabilities further overlap, as they offer similar expertise.
- Freelance Consultants and Micro-Consulting –
We are all familiar with the growing trend of freelance services, but Micro-consulting sounds kind of trendy too. The concept refers to getting expert help, in short, targeted projects for clients. It differs from months-long engagement and a team of Consultants working together.
It’s also interesting to mention that according to recent surveys, most Freelance Consultants like to stay independent and enjoy the flexibility of their work.
- New Billing Models Applied –
The demand for performance-based billing models is growing as well. More and more clients now have the technological capability to slice and dice every expense. And they are able to analyze their spending on Consulting, while evaluating the ROI. Performance-based billing is also popular among consultants. This pricing styles can prove mutually beneficial to Clients and Consultants alike, reducing the chance for unexpected fees, and setting up a well-defined benchmark for Consultants to prove the value they bring.
- Increased Competition & Continuing Commoditization of Services –
The freelance economy continues to affect the consulting industry as well. Online marketplaces of available experts offer Clients a multitude of choices when decide to hire experts or need advice.
- Never Ending Need for New Skills & Innovation –
The fast pace of innovation is affecting all industries. Consultants now strive to stay on the cutting-edge of knowledge. But by evolving and enhancing their expertise, Clients are not the only beneficiaries of this trend, Consultants too, as they are able to build better portfolios and ensure long term success.
We just walked you through some of the key elements characterizing the Consulting Industry today. Deepening your knowledge about the market is always useful. And getting a good understanding of it is Procurement 101.
Want to continue the discussion on the Consulting Industry today?
Ready to get started on your next project? Or need a fresh point of view on your Consulting Sourcing?
We will be happy to help. Please give us a call today, at no obligation.
Let’s get the conversation started.