In the digital age, consultants are faced with a multitude of challenges in order to remain competitive and provide value to their customers. Keeping up with changing customer demands is one of the most pressing issues, as customers are now more willing to seek out consulting services and expect greater value and flexibility at lower prices. The rise of independent consultants and new players entering the market has also increased competition and put pressure on prices. Additionally, consultants must also be good corporate citizens, demonstrating greater corporate responsibility, rather than just focusing on their results.
In order to stay ahead of the competition, consultants must innovate new ideas. As much of the specialized knowledge that was once exclusive to consulting firms is now available online, customers are more willing to research and have more influence than in the past. A Deltek survey found that 54% of chief operating officers said that their biggest challenge caused by the “change in customer behavior” was to provide more value at the same cost. Consulting executives must focus on cost control and improving working capital through better management of incoming and outgoing flows in order to increase profitability.
Limiting the number of budgetary cost overruns on projects is also important, especially in the case of fixed-price projects. New innovative technologies allow companies to do more with less, which has led to alternative digitally savvy business structures being implemented. Addressing growing competition in the industry is a top business priority for consulting firms. The increase in the number of independent consultants is proving to be a major competitive force, as they operate without the same overheads as larger companies and can charge well below what established consultancies can charge.
The ten largest consulting firms in the world now have a 56 percent share of the industry, while the top 200 own around 80 percent. Finding new customers can be complicated nowadays due to increased competition and price pressure. Piracy and data breaches can also pose a serious threat to consulting firms as information of such high value can be very destructive if it falls into the wrong hands. Independent consultants or small and medium-sized agencies will have to incorporate new projects frequently to stay in business.
Unpredictability in the market has become one of the main business challenges for management consulting firms for many years. Delivering a project isn't the problem; it's doing it faster, more efficiently, and with tighter budgets while still meeting customer needs that poses a challenge. Professional liability insurance for consultants and firms is important in order to protect against any potential risks or liabilities. Overall, consultants must strive to create lasting relationships with current customers, even if they have unrealistic expectations of delivery times.
They must also demonstrate greater corporate responsibility and innovate new ideas in order to remain competitive in this ever-changing digital landscape. In order to succeed, they must be able to adapt quickly and efficiently to changing customer demands while still providing value.