Consultancy firms are facing increased pressure as corporate clients seek to cut costs and reduce their reliance on external advisors. The global consulting market, which experienced rapid expansion during the Covid pandemic, is now projected to settle at a slower annual growth rate of 5–7 per cent.
A new report by Source indicates that 26 per cent of direct reports to C-suite executives state their companies are actively taking steps to lessen dependence on external consultants. This trend is already reflected in the financial results of major firms.
Deloitte reported a 2.5 per cent growth in its core consulting operations for the 12 months to May, a decrease from 4.7 per cent in the prior year. Similarly, PwC UK saw a 9.8 per cent revenue decline in consulting and an 8.9 per cent contraction in risk practices for the financial year to the end of June.
Despite this, some internal deficiencies, such as in mid-level decision-making, may still necessitate external advice. Catherine Anderson, director of Deliver, noted that consultants offer a different and wider perspective, bringing fresh ideas that clients need.
The report also suggests a shift in client preferences, with two-thirds of senior decision leaders favouring technology firms over traditional consulting firms for guidance on future business shifts.