The consulting industry is expected to be affected in a number of ways by the economic uncertainty that has taken hold of businesses and consumers alike over the past few months. Consulting firms had been anticipating growth this year as the economy picked up steam post-COVID, but many of those predictions have now effectively been nulled and voided in light of economic uncertainty, and some of the world’s major banks anticipating a recession within a year.
In this article, we will take a look at what the revised predictions for the consulting industry are, and which trends are likely to continue unchanged despite these uncertain times.
Promote Cost-cutting / Streamlining Services
Recessions present a unique challenge for consulting firms. Consulting engagements are generally discretionary in nature, which means that they are often the first to be cut when companies start tightening their belts. This can lead to a sharp drop-off in revenue and an increase in project cancellations.
However, if consulting firms angle themselves to provide services that are seen as necessary during a recession, they can find themselves in high demand. Here are a few examples:
Consulting firms that help companies cut costs are in high demand during a recession. This could include anything from process improvement to supply chain optimization.
Risk management services
As businesses become more risk-averse, consulting firms that offer risk management services will be in high demand. This could include anything from financial modelling to cyber security.
Many companies will need to restructure and streamline their businesses in order to survive a recession. Consulting firms that provide turnaround and restructuring services can be very successful during these times.
In times of uncertainty, businesses look to consulting firms for thought leadership and guidance on how to navigate through the challenges. This could include anything from webinars and articles to white papers and research reports. Consultancy firms that thrived during the 2008-2010 recession have one thing in common: they provided services that were seen as essential during tough economic times. If your firm can do the same, you will be well-positioned to weather the storm.
Many businesses will face challenges and crises during a recession. Consulting firms that provide crisis management services can help companies navigate these difficult times.
AI and Data Analytics
The consulting industry, like many others, has been investing heavily in AI and data analytics over the past few years, and that trend is expected to continue despite the economic uncertainty.
That may be because AI adoption is increasingly impacting their bottom line and that of their clients. In a 2021 McKinsey global survey, 27% of respondents reported at least 5% of earnings before interest and tax (EBIT) attributable to AI. In the same report, 79% reported a cost decrease from AI adoption across all functions, including service operations, manufacturing, HR, marketing, sales and risk management. This illustrates that, across the board, AI is helping businesses with their bottom line.
Consulting firms see AI and data analytics as a way to help their clients make better decisions, streamline operations, and improve customer experiences.
You’d be forgiven for thinking that in a shrinking economy, the job market would be a buyer’s market, with firms able to poach the best talent from their competitors. However, the job market is currently confounding those expectations.
Despite the current economic climate, many industries are still facing a talent shortage. This is partly because companies are still recovering from the Great Resignation of 2021-2022. This means that firms need to get creative in order to attract and retain the best talent.
AI can help you there too. Using data analytics, you can spot dips in employee engagement, and proactively make changes to improve satisfaction and avoid churn.
Data analytics can also help you identify potential high-performers and help them develop the skills they need to be successful in their roles.
Environmental, Social and Governance (ESG) Compliance
With water shortages, wildfires, a potential winter energy shortage, and an unforeseen war in Europe dominating headlines, consumers and investors are more concerned than ever about the environment, social issues and governance.
As a result, an increasing number of companies are looking to consulting firms for help with ESG compliance.
Time will tell whether a recession will deprioritise ESG compliance, but for now, it remains a top concern for consulting firms and their clients.
The consulting industry is facing some challenges in the wake of economic uncertainty, but there are still opportunities for firms that are able to provide essential services and thought leadership.
Additionally, consulting firms that have invested in AI and data analytics will be well-positioned to help their clients make better decisions, streamline operations, and improve customer experiences.
How Symanto Can Help
If you’re a Consulting Firm looking to navigate the challenges of the current economic climate, Symanto can help. Our highly flexible, AI-powered technology provides accurate and up-to-date consumer data that can help you and your clients make better decisions, improve efficiencies and reduce costs.
Use Symanto AI technology to find out what matters most to your clients and their customers, and discover the changing consulting industry trends that have emerged in light of economic uncainty. Stay ahead of the curve and position your consulting firm for success.
Get in touch today to learn more about how Symanto AI can help you and your clients with your bottom line, and navigate the challenges of the current economic climate.