Posted , in Business model
You can only blow up a balloon so far
The good news is that 2016 looks as though it will be another good year for the consulting industry: 67% of the senior clients in large-scale multinational corporations we surveyed at the very end of last year say they expect to spend more on consulting services this year, compared to last, and only 9% think they’ll spend less – roughly the same as last year.
But the bad news is that this might be as good as it gets. Think of demand for consulting like a balloon. Clients, getting busier and busier, simply don’t have the capacity or capability to do everything themselves and increasingly turn to consulting firms.
But our research suggests that clients in 2016, while still very busy, are no busier than last year: there’s not been the kind of jump in busy-ness we’ve seen in previous years, either in terms of activity or their willingness to use consultants. In 2013, our simple (but we like to think effective) ‘index’ of busy-ness stood at 72% (i.e. 72% of organisations were investing in one or more of the initiatives we asked about). That rose to 80% in 2014, and 84% the following year. This year, there’s been no further increase – the level still stands at 84%. So clients are still doing a lot; they’re just not doing more than they were doing last year, so the pace of work may feel a tad less frenetic as they get accustomed to it. Over the same time period, the proportion of organisations expecting this activity will involve using consultants has also risen, from 45% in 2013, to 48% in 2014 and a fairly whopping 54% in 2015. But in 2016, the proportion fell slightly: 53% say this will be the case.
Of course, such small changes are easily within the margin of error in surveys such as these, but I think it would be a mistake to dismiss this data. It’s a bit like when you blow up a balloon, you reach the stage where you simply can’t squeeze any more air into it: the rate at which demand for consulting grows may have peaked, even if the actual market size hasn’t.
Click here if you’d like more information on our predictions for the consulting market in 2016, or contact Charis Buckingham.