The pros and cons of specialising in consulting

Specialisms are the key to consultancy success, but come at a short-term cost. According to Damon Chapple, the co-CEO of Sonovate, firms catering to niche needs are more confident of their long-term survival than generalists – but focusing on small areas make recruitment even more difficult in a tight labour market.

Specialist skill or resource is the key to business success for almost every consultancy operating in the UK market. Specialism is what distinguishes a firm, defines it, and opens the doors to new business opportunities.

A consultancy’s ability to execute that specialism to high quality levels ultimately wins clients and referrals that fuel business for years to come.

The case for specialisms is clear cut. Yet, the specialist path is not easy. Providing a specialist service can bear long term fruit. But, identifying that specialism, honing it and building a business around it, may take years to fine tune and get right.

Research conducted by Sonovate this spring among a cross section of consultancies operating in the UK found that, despite the demands that offering specialist service places on consultancies, there is little appetite to give it up in order to offer a more generic service.

85% of small consultancies (those with 10 to 49 people) and 77% of medium-sized counterparts (those with 50 to 249 people) believe being specialist gives them a competitive advantage over generalist competitors – something which would contribute to the firm’s long term chances of survival. In other words, being a specialist attracts clients, because they are looking for specialist advice from specialist providers.

Yet, when our enquiries delved deeper we found clear signs that, while owning and promoting a specialism is key to longer-term success, the bid for this specialism comes at a short-term cost. 85% of small consultancies and 55% of medium-sized firms surveyed for our research told us that being specialised reduces their scope to expand their client base through new business wins.

Further, 85% of small consultancies and 82% of medium-sized consultancies told us they have enough good talent in their teams to continue servicing their clients well but would need to hire more consultants to expand their business. The need is strong; over half (55%) of medium-sized consultancies say they have lost out on contracts specifically because they do not have the capacity to take on more work.

However, finding specialists to join consultancies is, the research confirms, a huge challenge. 57% of all consultancies say that there is a shortage of highly skilled, experienced consultants and they struggle to find and retain enough of them. This rises to 77% among medium-sized consultancies alone.

Longer term thoughts

It is encouraging to hear the buoyant sounds and views from the consulting industry about the future ahead, both near and longer term. According to data from The Consultancy Growth Network for instance, four-in-five founder-led consultancies expect a third consecutive year of growth in 2023.

But how consultancies both navigate the conundrum of offering a specialist service and continually recruit to accommodate it at the pace required by clients continues to create a challenge. Specifically, the ability of companies to attract, retain and grow the specialist talent pool within their organisations that is subsequently made available to clients. Without it, a firm will fail to maintain a competitive advantage over the long-term. But, acquiring it takes resource, effort and time that smaller scale consultancies can often ill afford to waste.

Learning to wield this double-edged sword is paramount for so many consultancies in the market today and is key to commercial success over rivals. Whether by upskilling their own teams or outsourcing responsibilities to invaluable partners – such as Sonovate whose embedded finance and payment solutions serve 3,300 consultancies, recruitment firms and marketplaces globally – equipping themselves with a specialism is crucial, however taxing it makes that business’s growth strategy.

Partnering can feel painful and expensive, but the reasons and rewards will be bountiful. In the consulting market today, the forecast isn’t all blue skies ahead, but there are many reasons to be cheerful.