The consulting industry with its top-players McKinsey, BCG, and Bain has always been a rapidly evolving field that is constantly adapting to meet the changing needs of businesses and organizations, and on the other hand, also driving part of that change (e.g., McKinsey with the invention of the bar code).
As technology continues to advance, the future of consulting looks to be heavily influenced by developments in artificial intelligence, big data, and the Internet of Things.
Let’s break down each trend and its impact on consulting firms first. In a later section of this article, I also want to look at other trends and challenges for consulting firms.
Artificial Intelligence in consulting
One of the major trends in consulting that is likely to continue in the future is the use of artificial intelligence (AI) and machine learning (ML) to automate certain aspects of the consulting process. These technologies are already being used to analyze large amounts of data and make predictions about future trends, but in the future, they may also be used to automate tasks such as market research and financial modeling completely. This will allow consulting firms to complete projects more efficiently and effectively, which will ultimately lead to better results for clients and a lower workload for their staff. Consultants move into the role of translators between client data, the algorithms, and the output that is generated by such.
Big Data in consulting
Another trend that is likely to shape the future of consulting is the growing use of big data. As more and more information is collected and stored electronically, consulting firms will have access to an unprecedented amount of data that they can use to inform their work. This data can be used to identify new market opportunities, identify areas of inefficiency in a business, and much more. With the right tools and expertise, consulting firms can use this data to provide their clients with insights and recommendations that were previously unattainable. We are already seeing an increase in data scientists in MBB for years.
Internet of Things in consulting
The Internet of Things (IoT) is also likely to have a significant impact on the consulting industry in the future. As more devices and machines become connected to the internet, they will generate large amounts of data that can be used to improve operations and decision-making. Consulting firms will be well-positioned to help businesses and organizations make sense of this data and use it to their advantage.
Apart from technological trends, we are also observing a couple of trends that influence how consulting firms are conducting their business.
Fees at risk
Consulting is also shifting towards outcome-based consulting. Instead of charging by the hour, many consulting firms are moving towards models where they are paid based on the results they achieve for their clients. This shift towards outcome-based consulting is driven by the need for consulting firms to demonstrate the value they are providing to their clients. By using outcome-based models, consulting firms will be able to align their interests with those of their clients and ensure that they are working towards the same goals.
Remote consulting is also becoming increasingly popular in recent years and is expected to continue. Remote consulting allows consulting firms to provide services to clients regardless of their location and it also has many benefits for clients such as cost savings and scheduling flexibility. With the widespread adoption of cloud computing and video conferencing technologies, it is now easier than ever for consulting firms to provide remote services.
The consulting industry will also need to address the societal changes such as the increase of remote work, that emerged as a result of the pandemic. Consulting firms will need to adapt to the new ways of working and come up with effective ways to deliver services to clients remotely. Firms will also need to adopt new tools and technologies to improve collaboration and communication among team members and with clients. Additionally, consulting firms will need to ensure they have the right processes in place to provide the same level of service and support to clients remotely as they would in person.
While the amount of remote work has increased over the pandemic, we have seen a reversal to the mean again at the beginning of 2023, with most consultants having gone back to regular client travel.
Changes in the workforce
The consulting industry is also facing a changing workforce. Many firms are facing a skills gap as they struggle to find people with the right combination of technical expertise and business acumen. To address this issue, consulting firms will need to invest in training and development for their employees and also look for alternative ways to acquire the skills they need, such as through collaborations and partnerships with other firms or by leveraging freelance or contractor talent. This is also the reason why the MBBs have invested heavily in the acquisition of smaller, more specialized firms (e.g., the purchase of the data analytics firm Quantum Black by McKinsey) and the development of new and innovative recruitment tools such as the McKinsey Solve Game.
The consulting industry will also need to adapt to changing regulatory and compliance environment. Governments around the world are enacting new laws and regulations related to data privacy, cybersecurity, and environmental sustainability, and consulting firms will need to stay up-to-date on these changes and help their clients comply with them. This will require consulting firms to have a deep understanding of the legal and regulatory landscape and be able to provide expert guidance to clients on how to navigate it. Additionally, consulting firms will need to invest in their own compliance and regulatory management systems to ensure they are operating in compliance with all relevant laws and regulations. For instance, McKinsey has changed its internal governance significantly after a sequence of failures in this area (e.g., in South Africa).
Public sector work
The role of consulting in the public sector is also expected to increase in the future. Governments around the world are facing many complex challenges such as public health, education, and infrastructure. Consulting firms have the skills and expertise to help public sector organizations tackle these challenges. They can provide services such as program management, policy analysis, and performance measurement and improvement. Consulting firms can help public sector organizations to deliver better services to citizens, improve efficiency and reduce costs.
In addition to these trends, consulting firms will also need to keep up with the changing needs of their clients. Businesses are increasingly seeking to address complex, strategic issues such as sustainability, data privacy and cybersecurity, digital transformation, and many more. To remain relevant and competitive, consulting firms will need to develop expertise in these areas and be able to provide clients with practical, actionable recommendations.
Overall, consulting is becoming an increasingly complex and challenging field, but it also presents many opportunities for firms that are able to adapt and evolve. Companies that are able to take advantage of new technologies and trends, such as AI, big data, and the IoT, will be well-positioned to succeed in the future.
In conclusion, the consulting industry is likely to change significantly in the coming years as a result of advances in technology, changes in the global economy, and shifts in societal priorities. Consulting firms that are able to adapt to these changes will be best positioned to meet the needs of their clients and succeed in the marketplace. As technology continues to advance and new trends emerge, consulting firms will need to stay ahead of the curve and be willing to experiment with new approaches to help their clients achieve their goals, which is essentially the same as what they have been doing since their inception.
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