New consulting leadership to lead companies into the future

The global consultancy sector generates an estimated annual turnover of between USD 250 and 300 billion. This sector generates huge profits and continues to grow, especially in the United Kingdom and the United States. There are more than 700,000 consulting companies worldwide. While the number of companies continues to increase, 40% of the market is firmly in the hands of the ten largest firms: Accenture, Deloitte, Pwc, McKinsey, Ey, Bcg, Kpmg, Booz Allen, Mercer and Bain. The twenty largest consulting firms employ 33% of the professionals and generate twice as much business as the others: they know how to manage economies of scale.

I guess you have heard of the 'Big Four' the world's largest consulting firms. Deloitte, Ey, Kpmg and Pwc: these companies grew by 11.5% in 2023 and contributed significantly to a 14% increase of professionals employed in this sector. Very interesting is the staffing model of (almost) all major consulting firms. The 'up or out' policy still applies, i.e. structured career paths that, according to meritocratic and profit criteria, allow people to grow quickly or leave. In personnel management, they have realised that former employees can become clients and therefore they intelligently cultivate communities of former employees who often return after gaining relevant experience in other areas.

In recent years, we have witnessed some significant trends in the industry. The first, acquisitions made, often with the support of private equity funds that have realised the potential economic return. The second, specialisation in very technical fields, the famous market niches. I take as an example an American company, Birches Group, which specialises in providing wage analyses where nobody else does them, like Congo or Laos, with data centres set up in the Philippines. Thirdly, the expansion of the services and advice offered to clients. Think of the companies commonly called head hunters. Here again, about 40 per cent of the market is concentrated in the hands of the Shreks: Spencer Stuart, Hendrick & Struggles, Russel Reynolds, Egon Zehnder and Korn Ferry. In the last 15 to 20 years, they have started to offer other consulting services such as evaluations of executive potential, training programmes on individuals or teams or to carry out real organisational analyses, thus overlapping with training centres and universities. Not only that: in the evaluation and selection of candidates they have developed an internal ChatGpt that is used with data and information taken directly from them, not from social media that is available to everyone. An invaluable source of rich data that also solves the problem of confidentiality.

The challenges facing the consulting industry are many and reflect the concerns and focus of companies. I believe they have a technological root and a fundamental human component. The first is the expansion of generative artificial intelligence and customised machine learning. As these technologies become increasingly integrated into existing software and platforms, companies will need to focus on ethical considerations, data privacy and potential employment impacts. Another challenge is the continued digitisation of business processes, which remains a key driver of efficiency and innovation. Added to this is the increase in cybersecurity threats. In 2025, cybersecurity will be a top priority, with companies facing increasingly sophisticated threats such as phishing attacks and ransomware based on artificial intelligence. And finally, corporate sustainability, ethics and ESG, which is not new in consulting, but could not be more relevant at this stage. The global Esg consulting market is still growing: spending on these services is expected to more than double by 2027.

The role of the consultant is changing profoundly and not only in relation to the new technical skills required. In the past, the consultant helped the company to optimise production processes, making them more effective and efficient. In other words, the goal was to contain costs and increase profits through improved productivity. Many corporate restructurings originated from studies and analyses conducted by consulting firms. The second wave was when the consultant had to help the client manage change, change management, for example to enter new markets, launch new products or services or make strategic acquisitions. Complicated problems to solve. All skills that are necessary today but no longer sufficient. Today's challenge is not only complicated but complex, because the consultant must understand and manage the transformation process underway, adopting a systemic approach, to understand the complexity of ecosystems and not just provide sectoral or functional technical solutions.