In the ever-evolving world of consulting, staying competitive and providing value to customers is becoming increasingly difficult. To remain successful, consultants must be able to keep up with changing customer demands and come up with innovative ideas. In the past, consulting firms such as McKinsey, Boston Consulting Group, and the Big Four had unique knowledge and advice on best practices, making their offering invaluable. However, much of this information is now available online for those who are willing to research.
In addition, former students of top-tier consulting firms are now widespread, meaning their experience has been disseminated throughout the industry. As customers are more willing to seek consulting services, they have more influence than in the past and demand greater value and flexibility at lower prices. A Deltek survey found that 54% of chief operating officers said that their biggest challenge caused by the “change in customer behavior” was to provide more value at the same cost. In another Deltek survey, researchers surveyed consulting executives about how they think they could increase the company's profitability. Increased scrutiny over cost control came first, followed by the improvement of working capital through better management of incoming and outgoing flows, and the limitation of the number of budgetary cost overruns on projects, especially in the case of fixed-price projects. New players are entering the consulting market and alternative, digitally savvy business structures are being implemented.
In the Deltek survey, 55% said that addressing growing competition in the industry was a top business priority, while 33% of chief operating officers said that “defining competitive advantage was one of their top three priorities for the next five years. Boutiques and specialty firms aren't the only form of competition that's on the rise; the increase in the number of independent consultants is also proving to be a major competitive force. In the UK, there are now more than 2 million self-employed workers and that number will continue to grow. Most of these independent consultants work in the field of professional services, consulting and project management.
They are putting pressure on prices because they operate without the same overheads as larger companies and can charge well below what established consultancies can charge. At the top of the market, the biggest players only grow. The ten largest consulting firms in the world now have a 56 percent share of the industry, while the top 200 own around 80 percent. Both percentages have been rising since the turn of the century, driven by the Big Four and the growing number of operations in the industry as a means of growth. As a result, the professional services sector is facing increasing “medium pressure”, as companies too large to be considered specialists and too small to compete in the highest positions are under significant pressure. Finding new customers can be more complicated nowadays due to increased competition in this field.
Saying “yes” to wrong opportunities compromises credibility in the consulting market and future growth of your business. Consulting contracts can be broken or suspended if a company that needs more hands sees its financial belt tightened. To stay in business, consultants must face challenges such as creating a stable and reliable client portfolio that can offer projects throughout the year. According to an industry report by Deltek, “Insight to Action: The Future of Professional Services Industry”, consulting practices must consider strategies to address these challenges if they want to continue to succeed. Time tracking should give consultants a clear view of exactly what they do and why; marketing automation tools and systems can streamline business development activity; and process mining software can revolutionize process management for consultants. In order for consultancies to develop their visible authority, they must redesign their way of working.
It's important to understand these challenges so agents and consultants can succeed in this ever-changing landscape. To remain competitive in this new era of consulting, firms must be able to provide value at lower costs while also staying ahead of their competitors.
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