PAC on professional services: management consultancy | Unit4
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PAC on professional services: management consultancy

from  July 21, 2022 | 4 min read

In this blog – the fourth in our series on PAC Research’s 2022 benchmark for professional services – we’ll be looking at the report’s findings specifically for management consultancies – how big challenges manifest specifically within this vertical, and what steps industry leaders and key players are taking to address them.

Key takeaways for management consultancies:

  1. Management consulting firms are by far the most cautious among professional services businesses in terms of outlook – with 32% expecting a slight dip in sales and 36% expecting a decline in profitability. This possibly reflects the fact that last year was one of significant growth. They also have a less optimistic attitude towards their cashflow position.
  2. Management consulting firms are struggling to recruit and retain sufficient levels of skilled employees – which may also be impacting their future growth expectations.
  3. Performance for management consulting will require sales teams to effectively and efficiently target new logos to encourage growth – as will the ability to smoothly integrate new acquisitions into the organization’s systems and operations.
  4. Deal sizes are increasing – as are salaries and working costs. Management consulting’s more cautious outlook might help ensure that effective planning and control practices are put in place to help them navigate a volatile economic landscape.

The need for full operational control

Management consulting firms are finding it harder than most to create business models that reduce dependence on traditional time and materials propositions. This probably explains why so many expect to see a reduction in profitability in 2022 – they are unable to leverage the kinds of economy of scale that can be harnessed in other professional services sectors.

This relative dependency on specific ways of doing business makes management consulting more vulnerable to changing economic conditions. And this vulnerability means that achieving greater levels of operational control and efficiency will be key to survival and growth both in 2022 and beyond.

Indeed, there already seems to be a great deal of awareness of this need with MC firms leading the pack in terms of delivery – with 55% delivering more than three quarters of their projects on time.

MC firms are planning to recruit aggressively – but also struggle to effectively retain talent

While all parts of the professional services sector are expecting to recruit heavily this year, management consulting takes the lead, with more than 30% looking to increase their headcount by over 10%.

Some of the need for this kind of aggressive recruiting can be explained by industry specific challenges. Management consulting firms struggle to hold on to their people – with 42% experiencing 30% attrition or more.

This might be partly down to theirs being one of the most competitive talent markets around, but management consulting also suffers from constraints in terms of the employee experience. With many firms looking to largely put an end to remote and hybrid working (with the industry standard being for around 75% of their people to ultimately return to the office), they must work doubly hard to provide an experience of work that can attract the people they need to succeed.

Client feedback is becoming a key aspect of measuring performance – for both projects and people

54% of management consultancies now factor their customers’ feedback into employee assessment processes – and with good reason. Net promoter score (NPS) has become a key metric for project success – and management consulting firms lead the ranks in maintaining good ratings – 82% claim a score in excess of 50 – which is considered “excellent”.

What should management consulting firms be doing to improve their positions and achieve their goals?

Faced with limited capacity to pivot to more flexible business models, management consulting firms need to tightly control their operations to ensure project success and profitability – and the efficient and successful utilization of the people that work on those projects.

Investment in new operational technology is therefore key – especially since 71% of all firms across professional services agree that ageing legacy systems represent a significant barrier to innovation.

But this doesn’t just mean investing in tools that can unify and boost data visibility to enhance project management, reduce leakage, and optimize productivity. It means investing in technology that can keep track of the employee experience – helping to ensure scarce talent remains engaged, skills are matched to project needs, and attrition is kept to within manageable levels. The ability of AI and ML based tools to automate a significant part of the rote work associated with project managements and uncover new opportunities through advanced data analytics, will be key here.

Ready to learn more?

To read the full report and understand the complete picture of the professional services sector as we move into 2022, check out the PAC Research Study, Professional Services in Europe: A Benchmark for 2022, which you can download here.

To learn more about how Unit4’s products can transform your operations and help you to capitalize on the promise in 2022 and beyond, check out our dedicated professional services industry page or click here to book a demo of our products.

You can also learn more about our work with customers in the management consulting industry here, including how we can help to unify your operations and create a more streamlined and efficient approach to managing your relationship with your clients, your people, and provide a platform for end-to-end management of every aspect of your projects’ lifecycles.

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