Amid the decline in consulting revenues currently being felt across the sector, firms are desperately seeking a differentiator which could return them to growth. Jon Bance, chief operating officer at Leading Resolutions, believes that a quality-driven approach needs both the level of technology expertise to lead with authority coupled with an empathy-driven strategy that works alongside individual business needs.
Accenture’s recent $14 billion market value loss has come as a huge surprise to many of the market’s generalists. For many years, the largest consultancies have hedged their bets by relentlessly bolting on new aspects to their business – with Accenture’s billion-dollar invasion of the marketing and design space perhaps the most famous example of that. In the UK, too, a sea change in the market can be seen – as a recent analysis from Source Global Research highlighted a 3.4% contraction in the UK consulting market over the last year, the first fall since the pandemic.
This threatens many large firms, who have committed to huge hiring campaigns in the past in anticipation of further growth in demand, only to undergo regularly reported layoff campaigns in a bid to maintain partner profits. While early estimates hope that this revenue shrinkage is temporary and that 2025 will bounce back with UK market growth, addressing the reasons behind this fall and what it means to businesses seeking consultants is key.
According to Leading Resolutions COO Jon Bance, businesses, especially small and medium-sized enterprises, need a consultancy team that has their best interests at heart. Rather than “one purely centred on chasing short-term profit margins”, consultants need to present a firm that is capable of empathetic leadership.
“With falling market revenues, UK consultancies have a hole to fill for their shareholders,” Bance explains. “This has a knock-on effect of increasing rates on businesses, regardless of additional or even quality of service. When you’re considering paying a premium rate for a cookie-cutter recommendation, that’s where the problem arises.”
Tailored advice
According to Bance, as much as consulting firms might site inflation or other macro-economic impacts as the cause of their recent fall from grace, it may also be closely tied to the sector putting all its eggs in one particular basket. But historically, consulting tends to do well out of a crisis, as clients turn to them for help. So something else may be at play.
While investing in the UK consultancy market “made perfect sense in the post-pandemic” because “the market was hungry for technology solutions and, most importantly, how to implement them on a business budget”, that seems to have changed. The value delivered from those one-size-fits-all applications – from doomed forays into NFTs or the metaverse, to today’s endless waves of AI solutions – does not seem to have warranted further investment.
Bance continues, “One of the many problems businesses currently face comes down to redundant systems and outdated technologies – dubbed ‘tech spaghetti’, due to its long intertwining strands of systems that slow operations and drive-up costs. Ironically, this is replicated in the consultancies looking to advise them! Generic yet redundant approaches, outdated advice, and all driven-up cost your business more than the value you get. A different approach is needed; currently, it’s failing both on a consultancy market level and for businesses that are seeking genuine, objectively productive strategic advice.”
Bance believes that a quality-driven approach needs both the level of technology expertise to lead with authority coupled with an empathy-driven strategy that works alongside individual business needs. For 2025 and beyond, he asserts, “the consultancies that listen to their clients will take the lead”. Otherwise, “more layoffs are sure to follow”, as companies blame their talent rather than changing their own mantras.
“Quality over quality is key, especially when it comes to businesses looking for an effective consultancy to boost their business. With budgets tightening year-on-year, business owners and senior leadership need the reassurance that every penny invested is used in the way that’s best for their operations, instead of trying to use a big name and bigger team to put worries to rest.”
Bance concludes, “A change in approach to how consultancies operate is needed to ensure growth back to the sector. Many smaller firms are already ahead of the curve; their size and agility mean they are less burdened with bureaucracy and can adapt quickly to both changing markets and fitting solutions directly to their client. Leading with cost-effective, best-for-business solutions is the key to bringing back revenue, not just for 2025 but in years to come.”