In February this year, the US General Services Administration (GSA) identified 10 firms whose consulting contracts with federal agencies, running into billions of dollars, it wanted federal procurement teams to itemise and justify. For the moment, confusion and opacity reign: Some projects have apparently been cancelled outright, while others have been paused and then restarted. Some firms have laid off staff; others are taking a wait-and-see approach. Senior budget holders, who might have been able to provide clarity, have been removed from their posts. 

How could this impact the $75bn public sector market for professional services outside the US? We have two hypotheses. 

1. It will have less impact on the volume of demand than might have been anticipated

For obvious reasons, public sector consulting is the least global market. Consulting needs are driven by domestic priorities and investment; the use of consultants is often controlled by central procurement teams that wield immense buying power but change slowly. The extent to which changes in the US will directly impact demand outside its borders is therefore likely to be somewhat limited, at least in the short term. 

That said, the US is not alone in wanting to reduce its reliance on external support. The UK government announced last summer that it was expecting to make significant savings in its consulting bill, and other governments face criticism that too much money is spent on expensive outside help, which would be better invested in directly improving the delivery of public services or funding tax cuts. All the noise around the DOGE cuts may well encourage governments in other countries to pursue an obviously vote-winning policy. But they’re likely to be disappointed.  

We carried out research late last year on the extent to which the UK public sector market would contract in practice. The vast majority of senior civil servants we questioned said they’d had specific guidance since the July election to reduce the fees paid on current and future projects, and to cull the overall use of consulting services¹. About half said that most projects had been subject to cancellation, postponement, and price cuts. However, 80% of the projects affected were medium or small in size, with the very large projects—the type of projects DOGE has been targeting in the US—less likely to fall victim to cutbacks. In fact, more than 90% of UK civil servants think their use of consultants will increase in the next two years, with most people expecting usage to grow by between 5% and 10%.  

Asked why they wouldn’t be able to reduce their use of consultants, three reasons stood out. One was a familiar complaint that politicians are more likely to listen to external advisors than to public servants. The other two related to workload: Respondents felt that they were being asked to deliver too much too quickly, and that they lacked the necessary expertise to do this. In practice, all three reasons are linked: At the heart of most governments’ use of consultants is a reluctance to invest in the people who run public services.  

Moreover, public servants in the UK assume they will spend more on outside help because they won’t be able to execute the UK government’s plans unless they do so—and they think the government would want them to continue delivering those services. Most public servants in countries other than the US would probably share that view. The difference in the US—and this is currently confined to just the US—is that public servants there can’t assume that there is any federal commitment to keeping public services going. That’s a very different frame of reference. 

2. But DOGE’s activities will have an impact on clients’ buying behaviour in other countries

Amid all the noise surrounding DOGE’s activities, questions were asked about the value the 10 firms identified by the GSA were creating. There was also a push to replace traditional payment models (fixed price and time & materials) with fees fixed to outcomes achieved. 

Outcomes-based payment (and related approaches such as risk-reward) aren’t new, but historically they weren’t mainstream. The global financial crisis, which triggered the first material downturn in the consulting industry, put these payment mechanisms on the table. Clients, too cash-strapped to be able to stick with more conventional approaches, expected to be able to pay consultants’ fees out of the money generated by their work. But this shift was short-lived: Clients found calculating the amount they owed difficult (who delivered what?); consulting firms spent huge amounts of time wrangling over contractual terms, and many lost money. This meant that, when the pandemic arrived, neither side was keen to promote this way of working. In a highly uncertain environment, not knowing how much they were going to pay or be paid for services was the last thing anyone wanted.  

While the polycrisis may feel like a uniquely challenging environment, the headache it causes for clients is down to the accumulating layers of known problems (rising costs, falling profits, etc.), not the fact that businesses are operating in unknown territory. It’s therefore not surprising that around a third of clients say that they’ve been making more use of performance or outcomes-based contracts in the last six months. While that proportion is highest in the US, clients in other countries have similar views. 

Proportion of clients who say they’re making more use of performance or outcomes-based contracts, by major market² 

If, as seems plausible, the pressure DOGE has put on consulting and professional services firms to explain the value they’re creating is picked up in other countries, this creates two problems for the firms themselves.  

Firstly, the shift to outcomes-based payment is partly a ruse on the part of clients to bring prices down—that’s certainly what they say when we interview them. They don’t expect this approach to result in better consulting, simply cheaper consulting. The biggest issue for the industry last year was price pressure, which peaked at more than 10 times its pre-pandemic norm. We’re seeing early signs that pressure is starting to ease, but DOGE’s actions and its desire to switch to payment terms based on the delivery of results are likely to encourage public and private sector organisations elsewhere to move to using this approach. Secondly, the professional services industry isn’t well-prepared for this shift. If we take consulting as an example—although no part of the industry will be immune—79% of clients in our 2025 Client Perceptions survey said that the quality of work delivered by firms is high or very high³, but only 49% say that the value they deliver is in excess of the fees charged⁴. This creates the real possibility that the consulting industry will be, in the future, evaluated on the basis of something—value—that it’s not yet consistently and effectively measuring, communicating, or delivering. 

This could be DOGE’s biggest and most problematic legacy. 

What should firms do next?
For more information on Source’s recent report on consulting services in the public sector, or to discuss our insight into how changes in buying behaviour and pricing trends in the public sector market could impact your firm, get in touch. Through detailed market-sizing data, sector-specific analysis, and in-depth conversations with your clients and competitors, we can help you plan for the future armed with the insights that really matter.