The global economy has been under strain since the pandemic came knocking. Even though governments turbocharge their markets through subsidies and fiscal stimulus, the reverberations of the pandemic-induced afflictions are evident, especially in the fast-growing management consulting industry. While data by Statista indicates that the global management consulting industry braved economic headwinds better than the others, it still registered a sizable revenue loss of 12.5% across markets and segments in 2020. Notably, the industry managed a swift turnaround in 2021 and grew upward of 9 percent, albeit on a diminished base. These fluctuations, however, have created anxiety as the industry enjoyed breathless growth between 2015-2019. As economies return to the pre-pandemic levels in the near future, the management consulting business can also expect growth, as it closely mimics the market trajectory.
Hard numbers aside, the management consulting ecosystem has undergone a sea change in the past three years. The organizational pivot toward remote and hybrid workplaces and a runaway surge in the use of digital apps that has forever altered consumer behavior are transforming the business unlike ever before. Then there are employee-centric challenges such as high attrition, heightened expectations from employers and the need for futuristic skills – that demand a new playbook around upskilling and reskilling – that are further complicating the road ahead for the already challenge-inflicted business.
Below is a rundown of the key challenges facing the management consulting business and the opportunities that they present.
The Skills Gap and the Demand for the Right Skills Are Rising
A recent study by Mercer on global talent trends suggests that despite an overwhelming organizational focus on reskilling and upskilling, almost 98 percent of respondent companies reported notable skills gaps in their organization. This staggering finding underlines that organizations are playing catch up to the changing skills matrix. Plus, the industry is expected to resume its robust growth, which will induce demand, mandating workforce expansion and strengthening the employee count with professionals with specialized skills like computing science. These experts must offer deep expertise in conventional strategic consulting, Artificial Intelligence (AI) and Machine Learning (ML), cloud computing, software engineering, and digitization.
Therefore, organizations must redraw their strategies around talent acquisition and bolster their in-house strength with robust reskilling and upskilling programs by taking a bottom-up approach. Hence, they must empower their mid-level management by letting them choose the specialized skill sets that their teams wish to gain proficiency in.
Such an approach offers two distinct advantages. First, it will democratize the organizational reskilling and upskilling roadmap, broadening the skill sets that an organization can collectively provide. And second, it will augment employee engagement, reducing turnover that has marred global organizations irrespective of their size or domain of operations.
Automation Is Here to Stay!
Automation is no longer a vanity, a “good-to-have” mechanism. A recent Deloitte report on automation trends revealed that over 88 percent of respondents had either “implemented” or were “planning to implement AI in the next three years.” International Data Corporation (IDC) findings, too, suggest that companies globally spent US$ 342 billion on AI-based solutions in 2021 and are doubling down on their commitment to leveraging tech-based platforms. Thus, automation isn’t a perfunctory measure to tide over crises but a more sure-footed transition that will continue for the foreseeable future.
And there is a reason for this optimism around automation. Changes in the operating models due to the growing preponderance of remote and hybrid workplaces mean that management consulting firms will need new workflows to accommodate new ways of working. Plus, managing projects, resources, budgets, and historical data requires AI/ML-powered systems that can automate processes and aggregate data, cutting across organizational silos. So, management consulting firms will do well to incorporate a Professional Services Automation (PSA) solution that can easily enforce standard processes, formats, data and workflows across the organization.
Automation is also closely linked to employee engagement and experience. It helps them enjoy a more unified experience, while navigating a multi-environment workplace, enhancing employee productivity and efficiency.
Markets Will Remain Disruptive and Unpredictable
Management consulting firms solve problems and enable growth for their client companies. But, the pandemic has shown that disruptions and unpredictability can manifest quickly and massively change the ecosystem. This development means that management consulting firms must look ahead toward the future and predict a highly nebulous business landscape to help their clients better manage business challenges and earn profit. And they must equally upgrade and equip themselves continually to remain relevant amid fierce competition. It is a difficult proposition that requires a technology-driven approach and a focus on creating value for all stakeholders in the ecosystem – vendors, clients, and employees.
These challenges also present an enormous opportunity to future-proof the business of management consulting by steadily incorporating elements of digitization. However, digitization is a long-drawn and ongoing process. Thus, a PSA solution like the Polaris PSA is a great way to begin the journey. How effectively management consulting firms extricate themselves from their long list of predicaments will decide their pecking order in the market.