What does the future of consulting firms look like? That’s the (multi) billion-dollar question the consulting industry is asking now.
Research estimates that the global management consulting industry lost up to $30 billion in revenue in 2020. So where does that leave people who are tasked with managing a consulting firm — today and in the next few years? Here, we’ll explore the issue and outline three post-pandemic solutions for management consulting.
1. Shift your strategy: industry, region & focus
Right now, many organizations are investing their resources into critical operations rather than consultants. That doesn’t mean the work doesn’t exist; it just means you may have to look to different consulting industries to make up the bulk of your business at the moment.
While the travel, entertainment and restaurant industries will likely hold off on management consulting for a while, the healthcare industry has to move forward now to tackle needs created by the pandemic. The same is true for the e-commerce, logistics and supply-chain industries that are experiencing surges unlike anything they’ve seen before. If you can shift your focus to those on-demand industries, you’ll be more likely to carve out a space for success.
The management consulting industry is also seeing changes based on geography. In Europe, India and Brazil — countries that have been the most affected by coronavirus alongside the U.S. — management consulting is largely on pause. However, Africa, Australia and parts of the Middle East are seeing less of an impact, which means the consulting industry is more likely to retain (or even gain) a foothold there. Try expanding into one less-impacted area and grow from there.
Another strategy the consulting industry is adopting is shifting focus. While some management consulting needs remain the same — leaders still have to decide on executive pay and equity compensation, for example — others are no longer as pressing. Companies may decide streamlining human resources or revamping financial services can wait as they scramble to address the new normal COVID-19 created.
Consider focusing on areas that have grown over the past year, such as:
- Supply chain management
- Online customer experience
- New technology implementation
- Employee retention and motivation
When it comes to employee management, the future of consulting firms is promising. Many leaders need more help than ever navigating conversations around bonuses (which may or may not be happening), changes in pay and the shift to remote work, especially over the next year.
And, because consultants have always worked remotely to some extent, you have a leg-up on the expertise your clients need. You already know how to incentivize a remote workforce and adopt digitalization; now share that knowledge with them.
2. Take advantage of the new virtual world
Traditionally, management consulting firms have relied on travel and in-person meetings to get the job done. The global management consulting industry works quickly, with people traveling across the world weekly in order to address a crisis or advise on an issue.
But as COVID-19 continues to surge in certain places, we know that social distancing and government-mandated regulations aren’t going away any time soon. And with most consultants typically spending 80% of their working lives away from home, it puts them at higher risk of contracting or spreading the virus.
The good news is that, at this point, everyone understands those limitations. We all know that changes have had to be made, and we’re comfortable with what this new, virtual world looks like. Where teleconferences or virtual summits might have been seen as less-than-desirable options in the past, they’re now accepted in the management consulting industry. By cutting down on travel, lodging, expenses and overhead, your team may be able to recoup lost profits while still getting the job done.
3. Track how your team is spending time
When it comes to strategy in the consulting industry, knowing where you’re spending your time is crucial. Successful management consulting firms know that not every client is the right client. Some cost more in time than you make in profit, and the competitive post-pandemic market for consulting services means that you can only afford to keep clients that you can prove are making your firm money.
If you haven’t already, implement a time tracking solution like Time Tracker. That’s the first step to seeing the correlation between time spent and time invoiced. Your revenue depends entirely on how accurately you track and invoice time, yet 15% of consultancy hours are not billed to clients by firms.
Think about that. How far would an extra 15% revenue boost go right now? Furthermore, once you nail down exactly what you’re spending and where, you may find room to cut costs. That can help you establish more competitive rates, which will be crucial to weathering the coming years.
See how time tracking can work for management consulting
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