The Biggest Management Consulting Trends in 2020
Management consulting industry trends in 2020: Looking at the numbers.
The management consulting industry reached $259 billion in 2019, with over 700,000 consulting firms globally. The industry is expected to reach $343.5 billion by 2025. The greatest growth was in the UK, with the consulting industry there growing 8% to £6.79 billion. The industry reached $55 billion with a growth rate of 7.7% in the USA. Next, we will review the management consulting industry trends in 2020 that took place across the globe.
Global changes for management consulting industry trends in 2020.
Austria, Switzerland, and Germany will prove to be stiff competition for the UK market. This is because management consulting in these countries grew at a rate of 13% and reached €8.7 billion. It is anticipated that the growth will continue and even overtake the UK consulting sector. Specialized niche consulting firms have blossomed to serve local clients in these three countries. Furthermore, independent consultants are being called upon more to service SMEs in various industries.
The fragmentation of the consulting industry.
As management consulting becomes a greater need for companies, consulting firms have started to establish themselves within one of two realms. The first type are companies providing a boutique firm consultation at a lower cost. The second type are consultations from mega sized firms who serve conglomerates. This division has led to vastly different pricing, operating models, and brand strategy.
Major legislative changes are taking place that impact management consulting in the UK and the US. Brexit is now official, and is affecting how established businesses are working together and affecting the blossoming of new businesses. Work for hire, independent contractor, and intellectual property changes as well as liability insurance coverage are impacting how companies operate in the US. Also, maintaining compliance under new rules has become a main focus for consulting firms who do not want to be penalized or scrutinized for unintentional mistakes. Thus, firms are bolstering up compliance, legal, and cyber security teams.
Many firms of large and small sizes are beginning to find it more efficient to have outside resources partake on consulting projects. The most prevalent reason why is due to the specialties of outside resources, and the cost-benefit analysis of outsourcing the project when possible. Firms are forming strategic alliances and partnerships nationwide and even cross border, to more effectively service clients and their needs.
Businesses are having to change their operating models and methods to cut costs, implement the latest technologies, and digitizing almost all operations. Consulting firms will face issues with digital technologies and evolving business models to ensure efficiencies in 2020. Therefore, the digital strategies that businesses need to adapt are both back-end and consumer facing.
Until recently, the consulting industry had been slow in adopting new technologies and hiring processes. With the playing field being more even today between large and small consulting firms for access to information, even the conglomerates are changing their traditional operations. We believe the most important of emerging trends will be the adoption and use of automation and big data to operate at the same efficiency and speed as clients. If this evolution is successful, consulting firms are likely to experience far greater growth rates, and SMEs will be able to compete for business against conglomerates.
The future of consulting: Looking beyond management consulting industry trends in 2020.
Large and boutique firms are also adopting new strategies, including for the recruiting process. Candidates typically chosen to work at management consulting firms would be the ones with MBAs from prestigious schools. Now, consulting firms are thinking outside the box, and are hiring consultants based on real world interactions. For example, recruiters are hiring candidates through industry presentations, conference interactions, and giving interns a “home field” advantage with promotions.
About the Author
Arthur Mansourian has a 12-year track record as both a management consultant and investment banker, advising clients on valuation, capital markets, structured financing, mergers, acquisitions and divestitures and general corporate strategy.
Mr. Mansourian served as Vice President while at NMS Capital Advisors, when the company achieved cumulative sales growth of over 5,100% with annual compounded sales growth in excess of 120% from 2012 to 2017.