By Fiona Czerniawska
The answer is easy: just about anywhere, at least in the short term.
We’ve just published our projections for growth in consulting markets by sector and service across the globe, and the picture is positively buoyant.
Three factors matter here.
The first is the global economy: there’s a strong correlation between economic growth and growth in the demand for, and use of, consulting services. Except where consulting succeeds in allying itself to external forces of change (the big ones are regulation and technology, both of which are capable of producing spikes in demand even in dire economic circumstances), consulting firms are at the beck and call of clients’ profitability and willingness to invest. Put simply, organisations which are making money will hire consultants; those that aren’t won’t.
The second factor is a micro-economic one: what individual organisations are planning to do, the extent to which they’re willing to use consultants (rather than rely on their existing, in-house resources), and how they’re planning to use consultants (individual specialists, or large teams?). This is the focus of our latest research – and on all three of these factors clients are more positive today than they were this time last year. We ask clients about the range of activities they’re planning or already undertaking, and if we add these up to get an ‘index’ of the level of activity in their organisation, we find that it’s gone up from 80% (of organisations planning one or more of the types of initiative we list) in 2014 to 84% today. At the same time, the percentage saying that activity is also likely to drive up their use of consultants has also gone up, from to 48% to 54%. Last year clients told us that their use of consultants as individuals (body-shopping, staff augmentation: call it what you will) was also likely to rise, largely because they were still reluctant to hire too many full-time staff and were using consultants to plug the inevitable gap between what they needed to do and capacity of their workforce. That type of consulting is still predicted to grow this year, but the faster growth will be in more traditional styles of consulting – teams of people to carry out analysis and mastermind projects. That’s going to be good news for large consulting firms who otherwise can find themselves competing with low-margin contractors, even for blue-chip assignments.
But the recent collapse in oil prices is a good example of the third, and least predictable factor – political and economic stability. Our survey suggests that spending on consulting services by oil and other energy companies will hold up well. That’s been backed up by the conversations we’ve had with consulting firms: a minority have seen work cancelled or postponed, most see business as usual and a lucky few have actually seen growth as oil companies in particular struggle to understand scenarios they’ve never planned for. But future demand has to be more uncertain: there’s no way that oil companies will maintain their consulting budgets at current levels if the oil price stays so low. Everything hangs on whether the oil majors think that the low price is a blip or a long-term adjustment: with their already long planning cycles, they’re likely to keep investment going if they’re in the blip camp; those who think it’s a long-term adjustment will cut back.
None of that features in clients’ own predictions about how much they’ll spend with consultants. Like consultants, clients plan to make hay while the sun shines.
Source:: Source for Consultants