Spotlight on acceleration: Strategy and Consulting
The deal making drop
Coming out of the COVID-19 pandemic, the management consulting market experienced record breaking years through 2021 and 2022 as businesses looked to navigate the uncertainties and develop resilient strategies for growth.
H1 of 2023 has been a markedly different story. The global economy has slowed and many countries are facing recession. Inflation is at an all-time high and interest rates are skyrocketing. The net impact is that private equity deal making (a major source of project work for consultancies) is hugely down, and their corporate clients are seeking ways to optimise costs, improve operational efficiency, and streamline their processes. Whilst management consulting firms play a crucial role in helping organisations identify areas for cost reduction, operational improvements, and productivity enhancements, they are also often viewed as an unnecessary cost that can be quickly cut from the bottom line to help save.
The green shoots
Needless to say, it’s been a tough start to the year for most major consulting brands. With news regularly hitting the media about layoffs and rounds of redundancies, it’s clear that there was perhaps an overinflation of headcount in the buoyant years, leaving too many people on the bench when the market turned.
However, it’s not all doom and gloom. Whilst the macro view is challenging, certain segments of the consulting market are positively booming, from people advisory services, where companies look to streamline their operating model and invest in HR tech, to corporate finance and operations transformation, stripping out cost and restructuring assets in a down market. Green shoots are starting to show and already there is a positivity forming that suggests a return to normal as we move towards the end of 2023.
The hunt for new business
What does this mean for talent in this space? It’s been a bit quieter – most firms have been investing at the business development end (hiring executive talent who can bring clients and revenue). It’s a great time for firms to attract previously untapped partners – when pipelines are quieter, partners are ultimately ‘walking away from less’ and so more willing to take a risk. We have seen consultancies make strategic investments through business acquisition to bolster their presence in segments of the advisory market they were underweight in, and as they look to embed these new practice areas, they will need to scale to deliver and cover any natural post integration attrition.
Looking to the second half of the year, there is quiet confidence for a bit of bounce back. At some point, interest rates will drop and in turn this will drive PE activity. Corporate clients will start to move to a more balanced portfolio of work, thinking about growth as much as cost optimisation. Just like the post COVID boom, there is an exciting prospect we could see a return to the double-digit growth of 2021 and 2022.
With a network of people at the forefront of conversations with high-level decision makers, including board level professionals (global managing partners, CEOs, transformation directors, managing directors) and independent ex-management consultants, we can connect you with the consultants who can ensure you have the right business model, locations, markets, agile working practices and tech in place to overcome the challenges of the modern business world.
If you’re looking for an exceptional management consultant to help your business achieve new levels of success or you’re a senior professional looking for your next opportunity to shape an organisation’s strategic direction, please contact our team.