Andrew, Shambo, and Sierra: The Challenges Faced by the Global Consulting Industry
Andrew* is a 63-year-old partner in a small consultancy in England who finds himself with too much free time and too little cash. Shambo, a 32-year-old associate management consultant in India, has the opposite complaint: his hours have increased dramatically as clients demand more work for the same fees. Sierra, a 23-year-old associate in New York is feeling “horrible” pressure to perform so she is not laid off.
The experiences of these workers illustrate the unique set of challenges facing the global consulting industry, which generates annual revenue of about $860bn, according to US research group IbisWorld. The profession built to help others weather disruption benefited from a rush of demand during the Covid-19 pandemic and expanded accordingly. But that has come to an abrupt end, as clients from banks to tech companies cut spending on advisers in an uncertain economy.
“We had the biggest consulting market ever. They had client work coming through the door, and understandably they hired,” said Yazdi Deboo, a senior client partner at consultancy Korn Ferry. “I’ve been doing this for 25 years and this is one of the worst times I’ve seen.”
Now companies from Accenture to EY and McKinsey are slashing thousands of jobs. The valuations of consultancy businesses are falling — one reason EY pulled its Project Everest plan to separate its accounting and consultancy arms — while the industry’s reputation is under attack following scandals such as firms’ misconduct in South Africa.
Korn Ferry’s latest survey of North American consultancy partners showed the extent of the anxiety among staff. Nearly 60 per cent expected less demand and more pressure on fees in the coming year. More than 80 per cent were worried about having enough work and almost half expected further lay-offs.
Despite enduring optimism about the industry’s longer-term future, “it’s been a bit of a whipsaw” after the boom years, Deboo said. Many individual industry members are feeling burnt out.
To gain a broader view of how the upheaval is changing a profession that employs millions of people and influences multinationals and governments, the Financial Times asked readers working in the industry about their experiences.
The more than 320 responses, from consultants spanning Sweden to Singapore and Texas to Kazakhstan, provide a snapshot of the industry’s preoccupations. Five clear themes stand out.
Workload
Just under a third of consultants who responded to the callout said they had less work now compared with last year. That is not a picture of an industry in freefall, but helps explain the anxious mood. Many of the consultants who said they were working longer hours attributed the change to headcount cuts in their businesses. The shifts in workload were not spread evenly: consultants in North America and those working for the largest firms were most likely to say they had more work. Some consultants said they were working 60 to 70 hours a week to prove their worth. “I work harder to attract customers because there is less work out there than before,” one managing partner said. Those who were working less spoke of projects being delayed or cuts in areas such as acquisitions and private equity investments. “I’ve been doing this for 25 years and this is one of the worst times I’ve seen,” said Matthew, a user experience consultant from London. That echoed Korn Ferry’s findings. Six months ago, US consultants’ biggest concern was how to keep up with demand, it said. “Now, the refrain seems to be, ‘How do I keep all my teams busy?’
Wanting to quit
Perhaps the most concerning response to the survey for anyone running a consultancy was that one in three consultants said they hoped to be doing something else in five years’ time. In some cases that was because they were approaching retirement, but more commonly the message was from younger professionals. Several regarded consulting as a stepping stone to a role in industries they advised. But one 25-year-old vice-president said it was “not a rewarding long-term career”. A 34-year-old engagement manager was more blunt: “This is a job for partners and a bunch of juniors… it makes no sense to work here unless you are on a partner track.” Among the roughly half planning to stick with consulting, many described it as a varied and rewarding job. That chimed with something the chief executive of BDO USA told the FT in May: that the accounting firm was finding it harder to recruit graduates for audit work because “they think it’s going to be more exciting in advisory”. “The reward is the feedback from clients… and to have a hand in the growth of our younger colleagues,” said Nathan Owen Rosenberg, a 71-year-old founding partner of a small US firm. “I have been consulting for 38 years and tap dance to work everyday.”
Threat of AI
This summer, McKinsey rolled out a generative AI platform called Lilli, which promises the ability to search years of playbooks, case studies and research to anticipate questions, test arguments and let its people spend more time with clients. Almost every consultant who responded to the callout thought some of their work could be done by models such as this in the future but few expected AI to cause huge upheaval. Most expected some change but saw it as adding to what they did, not threatening it. “At the end of the day, consulting is a people-focused business, and people trust people,” one said. Another pointed out that “consultants thrive in times of change and ambiguity. That is exactly the opposite of AI models, which rehash existing solutions and content.” Iliya Rybchin, a partner in a small New York firm, said AI could take some rudimentary tasks away from his team but could not implement their recommendations. “The impact from consulting… comes from rolling up the sleeves and delivering change,” he said.
Working patterns
When Covid struck, the consultancy business, which is built on in-person advice and frequent travel, had to overhaul the way it worked overnight. “[I] moved from 100 per cent based at client site to 99 per cent remote,” one project management office director said. Even as firms try to coax more consultants back to the office, several said a drastic drop in travel had freed up time. Peter, a tax partner in London, initially spent the hours he was no longer commuting working but then “clawed them back” from his employer for more enjoyable tasks such as dog walking. “That ‘guilt-free flexibility’ has carried on,” he said. Even so, the shift to more remote work has lingering downsides. Several said managing team members and keeping clients happy remotely had been hard, leading to more transactional relationships and misunderstandings. A 60-year-old partner from Los Angeles said her firm’s eagerness for senior leaders to be in the office “for culture’s sake” had added to the pressure. Another concern was the “fuzziness” about boundaries between work and home, putting people on-call 24/7 and making them slaves to “draining” videoconferencing tools. “Partners and clients tend to forget that behind a Teams meeting on their laptop on a Friday at 7pm there are real people, who also have a family and a personal life,” one consultant from Paris complained.
Is it all a big con?
It is not surprising that an overwhelming majority of consultants reject the idea (popularised in a book of that name) that consulting is a “big con”. More than 70 per cent felt they added value. “Management should be able to do most of our work. But they just can’t. Our society massively overestimates the median business exec,” one principal said. Where consulting failed, some said, that was the fault of customers not listening.
Michael, a senior partner in transformation, said…
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