Freelancers: The disruptive force transforming the consulting industry
Disruption has become the new normal in business, as innovative technologies and new ways of working have transformed old business models and sparked a multitude of ambitious start-ups. Few sectors have been left untouched by the disruption bug – and the multibillion-dollar consulting market is no exception.
Since the 1970s, organisations across the industry spectrum have relied on big-budget consultancy expertise – usually from a handful of all-powerful firms – to solve their operational and strategic challenges. As a result, consulting has grown into one of the largest and most profitable professional services markets on the planet, worth a whopping $250bn to the global economy.
But just like so many of their clients, these big consultancies are now seeing their territory come under threat from rapidly evolving market forces and smaller players promising a leaner way of doing things. And amid these shifting sands of change, an army of freelance talent is coming to the fore.
A perfect storm for consultancies
The big brand consultancies might seem invincible, but they’re just as vulnerable to the market forces shaping the modern business world – of which technology is front and centre. At a time when everything is becoming automated, ‘appified’ and on-demand, the whole idea of bringing in huge teams of consultants to solve rapidly shifting business problems, seems intuitively outdated. Even more so, in an uncertain economic environment.
Consultancies used to have a monopoly on data and insights, but in the connected age, that’s no longer the case. A plethora of online tools, blogs and podcasts mean that today, any business can access reams of market research and other information at the click of a button, to inform their decisions and planning. That includes many of the tools and insights that management consultancies used to charge a premium for.
Businesses are also adapting to an ever-increasing pace of change and the rapid decision-making that goes with it. In years gone by, companies could spend months developing strategies in response to new opportunities, threats and competition. But in today’s ever-evolving landscape, this approach would mean developing a strategy that’s out of date by the time it’s presented. Instead, businesses want to emulate the agile start-up model of constant testing and iterating, to drive real-time evolution. In many ways, that goes against how big consultancies have traditionally liked to work.
Cost is also a factor. With worries of another recession on the horizon, eye-watering consultancy fees are becoming increasingly difficult to justify to stakeholders. As businesses discover the tools, technologies and talent that can be found elsewhere, they’ve been left wondering if they can’t achieve the same benefits elsewhere for less, and with more flexibility and agility thrown. For many, freelancers are the answer.
A freelance army – coming your way too
We’re in the midst of a freelancing revolution, with 35% of the US workforce and 16% of European employees now working independently – a trend that’s being reflected in countries all around the world. We see this trend across Asia and Africa too, and the momentum is gaining pace. What used to be a niche life choice has become mainstream, driven by global connectivity, online ‘matchmaking’ services, and the desire of individuals to achieve greater flexibility and a better work-life balance – alongside, in many cases, the ability to command higher wages.
As a knowledge-focused profession with relatively low overheads, consulting is fertile ground for freelancers, with thousands of talented individuals jumping ship from the big firms to set up on their own. This huge influx of talent has come at just the right time for many organisations, giving them the high-quality skills they need on demand, and at a fraction of the price of the big firms.
A 2020 article in Forbes, highlights the global trend for clients to increasingly go to freelance management consultants in many high-skill areas; both for remote and onsite projects. Further, research by Odgers Connect found that, in the UK already in 2018, a fifth of management consulting work went to freelancers, with 40% of businesses saying they have an even split between consultancy firms and independents. The study also sheds light on their reasoning, with flexibility named as the biggest driver, followed by price, quality and speed. Digital and data skills are also in high demand, suggesting the ability to respond quickly to digitization challenges is a key driver.
Organisations are therefore finding that, in the new business world, in many cases, freelance talent is fulfilling their consulting requirements more effectively than the big consultancies. Freelancers can be hired quickly, at short notice, and for flexible contracts and requirements. And on top of that, in many cases they actually get better work, at a more competitive price point.
The death of big consultancies?
So does this mean the end is nigh for the big four? Unlikely. Pre-pandemic revenues were still on the up for the key players, demonstrating huge continuing demand for their services. Big consultancies have also been busy innovating what they offer and how, including new tech platforms and specialist expertise – plus their own freelance talent pools to increase their own speed of response.
In fact, we at Outsized as well as many other talent platforms, already work with big brand consultancies who are implementing more agile operating models.
But the market has certainly opened up, making top-class consulting more accessible to a wider range of businesses, providing opportunities for talented, entrepreneurial individuals, and forcing the big players to innovate their approach. And this is only the beginning.
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