Impact of COVID-19 on Consultancy

The Coronavirus pandemic led to the huge crisis across the globe. The impact of it is being felt by businesses around the world. COVID-19 has created so much dent in Consultancy Sector. Consultancy which support businesses across fields as diverse as sales, marketing, human resource, manufacturing to formulate strategies by doing in-depth research, cost-cutting, risk analysis, product innovation, staff recruitment, digital technologies, etc.

According to research done by Consultancy.org, Consultancy industry could lose up to $30 billion in revenue in 2020 across the globe. As per the research due to the pandemic size of consultancy sector could get reduced by 19% which means reduction in the market valuation from $160 billion to $130 billion as of 2020.

Most consultancies have to refocus on different strategies to refocus their business models, value propositions, changing organisational structure, value propositions. Previous deals are dried up in the emerging markets due to corona. Now consultants have to focus on helping the business survival during the pandemic.

Global travel by consultants to provide their clients with advisory matter is not possible. Firms are looking forward to provide services remotely.

The 2008 financial crisis led to the drop in the demand for consultant sharply.

It’s fair to say that every sector has been disrupted and been impacted by COVID-19,” said Kevin Dolan, a senior partner at McKinsey & Company. “In terms of what we’re seeing, it’s more strategic work, very fundamental kinds of questions: how to help companies, [profit and loss] balance sheets, looking out for the customer, looking out for employees. It’s all very real, very intense – and actually quite human.” 

As per the Source Global Research, a London-based firm, predicted in late April that the U.S. consulting market would shrink 20% in 2020. The firm projected Human resource consulting would take a hit. There is also drop in consulting for manufacturing markets, energy, services, and healthcare.

Many small strategy and consulting firm will face huge problems as they have small projects of 3-4 months. And many such projects lined up so there was continuity in the job. But now clients started reevaluating budgets and timelines, which has created the problems for the small consultancy firms.

Opportunities for consultants-

ü Digitisation is the trend that is here to stay. In today’s era of digitisation organisation has to adapt automation and adoption of new technology. During and post corona digital will be the largest business driver of consulting.

ü Many companies want consultants to help them to restructure their business and deal with this economic crisis along with the cost cutting. So, still there is demands for consultants.

ü Many clients of these consultancy firm started relying on the virtual collaboration and conferences instead of physical meetings. So, the trust factor will soon be built with the trend.

ü E-commerce (particularly the food industry) is at boost. Companies are hiring consultants to boost the supply chain landscape.

ü Due to the pandemic M&A become cheaper. Companies need a quick deal makers for such M&A. Consultancy role come in the picture.