Key Consulting Industry Trends to Watch in 2024 and Beyond

The consulting industry is rapidly evolving. New technologies, workplace shifts, and strategic priorities are transforming how consultancies operate and deliver value to clients.

As we enter 2024, several pivotal trends will shape consulting over the next few years. Firms that understand these trends will gain a competitive edge in guiding clients and growing their businesses.

Accelerating Technology Innovation Brings New Opportunities

genai
genAI

Leveraging Generative AI to Enhance Quality and Insights

Generative AI (genAI) is already a game changer in consulting. Leading firms like McKinsey, Bain, and BCG are using genAI for competitive analysis, scenario modeling, and developing high-quality insights at scale. Innovative applications include using AI to synthesize complex market data into strategic recommendations for clients.

The AI software market is experiencing explosive growth. Spending is projected to reach $297.9 billion by 2027 (source: Gartner), reflecting a robust compound annual growth rate (CAGR) of 19.1%. Market growth will continue accelerating in the coming years, rising from 17.8% CAGR currently to an impressive 20.4% CAGR in 2027. A key driver is the rapid adoption of generative AI capabilities. Generative AI's share of total AI software spending will leap from just 8% in 2023 to over one-third at 35% by 2027 (source: Gartner). The tremendous expansion underscores how generative AI is fundamentally transforming business applications of artificial intelligence.

There is also growing client demand for genAI expertise. As companies rush to adopt genAI, many need help implementing it ethically and strategically.

Consultants can lead clients through key steps like:

  • Training AI responsibly by minimizing biases and ensuring transparency
  • Integrating genAI into operations and decisions effectively
  • Developing governance policies around genAI use

By embracing genAI themselves and guiding clients' adoption, consultancies can differentiate their services.

Capitalizing on Demand for Holistic Digital Transformation

Digital transformation remains a priority, but many organizations still struggle to extract value from technology investments. Information can be found in an article by Boston Consulting Group (BCG) titled "Show Me the Digital Value" from October 10, 20221. The article discusses the growing digital value gap and the benefits achieved by companies that framed their digital transformation strategy around customer values and focused on changing culture. In another study, the Harvard Business Review also provided insights into the value of digital transformation in an article titled "The Value of Digital Transformation" from July 31, 20232. This article highlights the significant differential in performance between digital leaders and laggards, emphasizing the creation of shareholder value by digital leaders.

Consultants should consider providing an integrated transformation framework encompassing updated strategy, changes in culture and employee mindsets, operational shifts, product and service innovation, customer engagement transformation, and improved data analytics. Firms able to connect these areas into a cohesive execution roadmap will be best positioned to drive results.

“At least 40% of all businesses will die in the next 10 years… if they don’t figure out how to change their entire company to accommodate new technologies.” — John Chambers, Cisco 

In response, client demand is shifting. Rather than siloed technical implementations, companies want holistic guidance across areas like:

  • Cloud migration strategies
  • Revamping operating models for hybrid work
  • Change management and employee training
  • Developing use cases and business cases to maximize tech investments

Consultants should position themselves as strategic partners who can synthesize IT insights into resources that drive desired digital outcomes. Firms with broad transformation expertise will be poised to meet market needs.

Workplace Shifts Call for New Approaches

Evolving Talent Strategy for a Changing Job Market

Today's top talent expects more from employers around culture, flexibility, engagement, and progression. A 2022 McKinsey survey found the top reasons employees leave are lack of career development and growth opportunities, work-life balance issues, and lack of coaching and support.

Consultancies enhancing their own talent brand through remote and flexible work options, DE&I (Diversity, Equity, and Inclusion) commitments, and career mobility opportunities can differentiate themselves. "Why Remote Work Makes Good Business Sense" an article posted on Business.com, articulates a compelling case for this transformative shift, illuminating the myriad benefits that accrue to both employers and employees.

Assessing company culture via structured frameworks on inclusivity, mobility, work-life balance, and employee support can help identify gaps to close. A more human-centric talent strategy will be critical for attracting top consulting talent.

Many companies are seeking help transforming hiring and retention. Consultants can provide strategies to:

  • Widen talent pipelines through inclusive hiring
  • Offer hybrid or remote work arrangements
  • Support employee wellbeing and work-life balance
  • Upskill employees and promote internal mobility

By specializing in talent advisory services, consultancies can help clients adapt to a radically changed job market.

Optimizing Hybrid Work Models and Tools

Hybrid work is here to stay—remote work options are non-negotiable for workers today. But organizations still struggle to adapt. Just 15% of leaders feel fully ready to manage hybrid teams, per McKinsey.

Consultants can guide clients on how to effectively lead hybrid teams in areas like:

  • Implementing flexible work policies
  • Setting expectations around remote work
  • Using digital tools for communication and collaboration
  • Maintaining engagement and connection with distributed staffers

At the same time, consultancies should ensure their flexible engagement models align with client needs and expectations in a remote-first business landscape.

Strategic Focus Areas Emerge Across Industries

Navigating the ESG Landscape

Environmental, social, and governance (ESG) factors are now central to corporate strategy. But ESG is complex, with nuanced stakeholder expectations and new regulations.

Many companies need help developing comprehensive ESG plans to:

  • Set ambitious ESG goals
  • Collect and report data
  • Communicate ESG commitments internally and externally
  • Identify risks and opportunities in the ESG landscape
  • Align business practices with ESG objectives

Consultancies with specialized ESG advisory services are poised for growth as demand increases.

Focusing on Target Markets and Specializations

Generalist firms once dominated, but clients now prefer specialized consultants with deep industry expertise. Consulting is fragmenting into niches.

Firms should examine their current clientele and identify specialty areas with growth potential based on:

  • Industries that attract the most business in
  • Specific client needs are routinely addressed
  • Existing competencies and experience

Specializing allows for providing tailored solutions while commanding higher billing rates. However, firms must ensure specialties align with market demand.

Embedding Purpose Across the Business

Today's stakeholders demand that companies care about more than profits. Consultancies must help clients align business models with their societal purpose.

Services like:

  • Refining and communicating organizational purpose
  • Setting ESG goals and reporting progress
  • Improving diversity, equity, and inclusion
  • Ensuring the ethics of emerging technologies like AI

There is a clear need for consultants to guide purpose-driven transformation and responsible business practices.

Key Takeaways

  • Leverage generative AI but also prepare clients for ethical, strategic implementation
  • Provide digital transformation guidance across operations, not just technical advice
  • Offer specialized talent strategy services like revamping hiring and retention
  • Ensure flexible delivery models suit remote-first work environments
  • Develop niche advisory services tied to specific industries and technologies
  • Embed purpose across organizational strategy and operations

The most agile, specialized, and tech-enabled consultancies will thrive amidst the rapid evolution of the industry.

Now it's time to think How will your firm respond to the key consulting trends?

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