RALEIGH, North Carolina, June 25, 2020 /PRNewswire/ -- Management consulting, one of the industries which involves extensive travel, has been adversely impacted by coronavirus pandemic. The global management consulting industry is expected to lose around $30 billion of value in 2020, as clients tend to delay projects, decrease scope or cancel them altogether, according to Beroe Inc, a procurement intelligence firm.
Consulting firms with a strong technology footprint and/or well-established client relationships are still seeing opportunities. The anticipated economic slowdown as a result of COVID-19 indicates that challenging years are ahead for consulting firms.
The management consulting industry is expected to shrink across the globe. Travel restrictions due to COVID 19 have impacted the management consulting industry as typically, management consulting professionals spend nearly 80 percent of their working lives away from home. Organizations are stabilizing their bottom line by eliminating discretionary expenses, limiting hiring and also reducing the use of external advisors. This will reduce the demand for consulting services and cause a revenue dip for the global management consulting industry.
Beroe, which is based in North Carolina, further stated that procurement experts can access this report on market intelligence platform Beroe LiVE: live.beroeinc.com
As a result of the coronavirus pandemic and economic slowdown, consulting firms might take up a digitally centered approach and provide services at a lower cost due to elimination of travel expenses. Major industry risk drivers with almost certain risk probability are the demand for management consulting and consulting billing rates. Demand for consulting services might decline due to cost cutting by client firms. In addition, the consulting billing rates are expected to drop by 10 to 15 percent, with the drop in rates varying by service line.
There is a high impact level of COVID-19 predicted for traditional consulting firms. Clients have postponed or dropped lots of consulting projects and there are major scope reductions in on-going projects. This will have an adverse impact on the revenue of consulting firms. Meanwhile, the impact on independent consulting firms is medium. Independent consulting firms might leverage the situation as an opportunity as they have lower overhead costs and hence can provide services at lower rates.
- The prediction of year on year change in the consulting industry size has improved globally from -19 percent to -18 percent. The key factors that are driving this positive change includes improving prospects in the public sector, manufacturing, and healthcare consulting, and in strategy work.
- Firms are slashing costs as they seek to navigate the crisis. The measures include lowering salaries and asking staff to take (unpaid) leave, cutting operational costs on items such as travel, training and events, and freezing their intake of new people and recruitment budgets.
- In the wake of the coronavirus pandemic, companies are identifying the priority of consulting projects and analyzing which management consulting projects should continue and which can be postponed/ halted for better optimization of resources.
- Keeping in mind the short term and long term impacts of COVID-19, companies are seeking to reduce the scope of current and future projects wherever possible, and re-negotiate the rates with consulting firms.
- Many organizations are considering putting a hold on their expansion plans, until the market stabilizes from COVID-19. Thus they can cut down on related advisory services and expenses, and budget for the future.
- Many organizations are also exploring low cost options like asset based consulting/ independent consulting instead of the previous formats of engaging with typical global management consulting firms.
The research methodology adopted for the report included:
- Experts with twenty years of domain experience
- Interaction with buyers
- Inputs from supply chain partners
The impact of the pandemic on all the consulting firms will not be on the same scale. Multi-faceted firms like MBB and the Big Four will be able to come out of the crisis better than others. The industry can also expect a consolidation as top firms will spot opportunities to acquire innovative, boutique firms at knock-down prices. Many businesses will seek to leverage alternatives to tier 1 consulting firms such as engaging with regional/ boutique consulting firms or independent consultants who can provide similar service at a lower cost.
The report also includes:
- Management Consulting
- Current Global Market
- Major Risk Factors
- Industry Risk Factors
- Risk Probability
COVID-19 Impact Analysis:
- Impact to Management Consulting Industries
- Traditional Consulting Firms
- Independent Consulting Firms
- Short-Term Impact
- Long-Term Impact
- Measures Taken By Companies
- Supplier Outlook
About Beroe Inc.:
Beroe is the world's leading provider of procurement intelligence and supplier compliance solutions. We provide critical market information and analysis that enables companies to make smart sourcing decisions—leading to lower costs, greater profits and reduced risk. Beroe has been providing these services for more than 13 years and currently works with more than 10,000 companies worldwide, including 400 of the Fortune 500 companies.
To learn more about Beroe Inc., please visit: http://www.beroeinc.com
SOURCE Beroe Inc.