Consultancy firms told to step up as bosses threaten to cut ties
Stretched corporates are under pressure and looking to slash costs – and consultancy firms are in the firing line, writes Maria Ward-Brennan. The golden age of post-pandemic consulting is fading, leaving traditional advisory firms with a clear ultimatum: innovate or be replaced. The next generation of executives is pushing to reduce dependence on external consultants. [...]
Consultancy firms are facing increased pressure as businesses grapple with cost-cutting measures, according to a new report by Source. The once-booming post-pandemic consulting industry is now facing an ultimatum: innovate or be replaced. A significant number of direct reports to C-suite executives, 26%, revealed that their companies are actively reducing reliance on external advisors.
Catherine Anderson, director of consultancy firm Deliver, emphasized that while consultants bring a fresh perspective and innovative ideas, clients are increasingly relying on them for invaluable insights. Despite this, internal decision-making deficiencies and judgments still play a crucial role in companies' reluctance to let go of external consultants.
The rise of tech and data firms is also influencing clients' preferences, with two-thirds of senior decision-makers favoring technology firms over traditional consulting firms to navigate major business shifts. The global consulting market growth is projected to slow down to 5-7% per year, down from the rapid expansion seen during the Covid pandemic.
Major consulting companies like PwC UK and Deloitte reported a slowdown in consulting growth, with Deloitte's core consulting operations growing by only 2.5% in the past year. This slowdown has been attributed to the market's single-digit growth pre-pandemic and the post-pandemic pent-up demand, which is now proving harder to capitalize on.
Despite this, clients will continue to seek the help of external consultants to guide them through the challenges ahead.
Written by urgent.news from City AM's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
