What Lies Ahead For Consultancy Firms In 2014?
A recent attendance at a breakfast seminar run by Source for Consulting yielded some illuminating insights into the future of consulting markets, both in the UK and the globally. There will be strong growth opportunities for those consulting firms with the right focus and those who are agile enough to respond to changes in the market. Yet, there are new and unexpected challenges on the way too.
Opportunities and Growth ahead for Consulting businesses
First, let’s start with the good news – the consulting industry in the UK as a whole grew by just under 5% last year. This is significantly higher than the overall growth for the economy and shows that not only is it a good time to be in consulting but that customers still see the value of bringing in expert consultants. This growth has been driven in certain key sectors including retail, financial services and IT services. In fact, retail grew the fastest of all sectors last year – pushed on by requirements for developing multichannel routes to customers and the increasing importance of having a strong social media strategy. Financial services, the biggest sector in the UK, also showed solid growth particularly for those firms involved in regulation, remediation, and transformation projects.
Overall, more people are expecting business spend on the use of consultants to increase rather than decrease, with a significant number expecting consulting spending to remain at least the same.
Challenges for Consulting Firms
Source’s work also came up with a few unexpected changes. Firstly, there seems to be a push by certain sectors of the market to reduce the reliance on consultants. Companies, particularly in financial services, are looking to find other ways of filling the gaps in their capabilities with alternative solutions, such as using an internal resource or hiring a temp. They are being challenged by senior management to do this. Secondly, the number of companies expecting to use consultants to drive growth and implement new technology is decreasing. Consultants are therefore facing a challenge to prove their worth and deliver value in each project they undertake. If the trend for growth is to continue in the industry, Consulting firms must be able to clearly demonstrate their previous successes and ROI in order to win new business and persuade a number of business, particularly in financial services, that consultants still have a valuable role to play.
Consulting firms must capitalise on the strong opportunities available
Many UK businesses who may traditionally have relied upon the services of a consulting firm have been operating with fairly “lean” organisations for a while and have kept expenses lower by keeping only essential staff. Therefore, many companies will require engaging external resources to fill skills gaps in the months ahead, particularly when embarking on new projects, changing processes, implementing new technology, or completing mergers & acquisitions. This absence of choice means that despite a general reluctance to bring consultants in, these same businesses will have to engage with consultants in order to get essential jobs done.
So, strong opportunities lie ahead for those consulting firms focused on retail, financial services, healthcare and technology markets - particularly if mergers & acquisition, transformation, improving existing technology or increasing efficiency is your line of business. Yet, be aware of some push back and clients asking themselves if they can find an alternative way to get the job done.