Consulting firms across the globe have significantly improved their results compared to previous years, concludes a new research survey from IDC, commissioned by Deltek. On average, revenue was 40% higher than last year and several other key metrics such as proposals won, profit margin and billability all increased by more than 20%.
Similar to other industries, the crisis years 2008 to 2012 had a major impact on the consulting industry. In several markets the consulting sector faced a (large) contraction, as a result project pipelines, fees and profitability came under pressure. For many firms across the globe the impact was so severe, it brought them into bankruptcy, including the likes of illustrious firms such as LECG Corporation (bankrupt in September 2011) and Monitor (saved from bankruptcy in 2012 by Deloitte). Yet also other large names struggled, for instance Roland Berger came under high pressure to sell itself to a Big 4 player and even Booz & Company decided to merge itself into a larger player to sustain its financial health*.
Signs of recovery
Over the past year, though, the consulting industry has shown increasing signs of recovery. According to most recent data from analyst firm Source for Consulting, several large markets have shown positive growth rates in 2013, including the three largest markets US, UK, and Germany. However, there remain exceptions – in particular, the Southern-European countries and the Benelux still find themselves in a challenging economic climate.
The recovery of the consulting market is confirmed by a new research survey** from IDC, commissioned by Deltek. The study looks into the performance of more than 250 mid-sized and big consulting firms from European and North American markets. 10 key identified metrics were analysed, and the survey shows that on average all firms indicated better performance on each of the 10 metrics compared to the previous year. “The survey data is clear: the key business metrics of revenue and margin are increasing for a large number of firms, supported by more proposals, more projects, more deals and higher utilization,” the report states.
With the positive outlook on the future comes a new challenge: how do consulting firms prepare for growth in a profitable way? According to IDC, they need to not only focus on their core business areas such as client management, project delivery and knowledge expertise, but also ensure better visibility and project control. 5 tips are given:
- Get a complete and integrated lifecycle view of your business, so you can make “better” business decisions.
- Gain deeper visibility and the capability to manage the lifecycle of the project.
- Maximize the value of clients through systems that provide a lifecycle view of the client and key client metrics.
- Define and build the “right” new services based on relevant business data and manage the effective introduction of services to maximize value to clients and the business.
- Eliminate data and people silos through the application of integrated technology.
Download the full report 'Managing Your Consulting Firm for Growth'.
** “Managing Your Consulting Firm for Growth” Worldwide Survey, an IDC Infodoc, sponsored by Deltek, July 2014.