Consulting Headwinds or Tailwinds?
Ten years ago at this time, the financial meltdown started sucking the consulting industry down a vortex from which it took almost four years to recover. The industry has been strong for the last half-decade and the general consensus is that consulting’s boat has risen with the economic tide. The Wall Street Journal reported this week on the Big 4’s collective earnings reports by observing: “The 10.4% combined revenue growth was the firms’ strongest since at least the 2008 financial crisis.”
I interpret those statements akin to the bow watchman telling Captain Smith: “Nothing but smooth sailing, sir!”
Remember that consulting lags the general economy. So many consultants coasted well into 2009 riding the cutback waves generated by their clients. There is a similar effect now, driven in large part by digital and continued restructurings of old-guard companies (looking at you, GM).
The move by many global firms to products and solutions steers them away from project-to-project sustenance. But a sizable portion of their business is still time and materials. In balancing two business models, you often see conflicting philosophies — “we are building a sustainable business” lives side by side with “the gettins’ good so let’s keep gettin’.”
The recession drums are beating again. And when the bottom drops – as it always does – consultants typically are the odd ones out. Hence the drive to prove value. Otherwise, the industry will learn (again) that “trusted advisor” rings hollow when consultants are the first ones kicked to the curb.
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