31 July 2023 – Mindelheim
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ESG, digital transformation and crisis resilience driving consulting demand in 2023
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Consulting companies reviewing internal support functions
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AI tools transforming consultants’ everyday work
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New Lünendonk Survey on the consulting market published
Booming demand is colliding with a shortage of skilled workers. This was one of the key takeaways for the German consulting market in the wake of the Covid-19 pandemic. The consequences? Renewed efforts at recruitment, salary rises and more attractive benefits, increased fees and occasional rejection of projects. And in the light of high demand and consultants’ corresponding revenue expectations it is a trend that can be expected to continue, especially regarding topical growth drivers such as ESG, digital transformation and crisis resilience. Nevertheless, job-cutting programmes signalled by global business consultancies and declining capacity utilisation rates among German consultants are a cause for concern. Both overcapacity as well as the opportunities provided by artificial intelligence (AI) are contributing to this development. The new Lünendonk Survey 2023 ‘Business Consulting in Germany’, now available from www.luenendonk.de/en, addresses these tensions.
Overcapacity
At the end of the first quarter and during the second quarter of 2023, reports mounted of planned job reduction programmes among large international professional services providers. In the US, for example, EY said it was responding to overcapacity by cutting 3,000 posts. KPMG also announced a 5-per-cent trimming of its workforce in the USA. The reasons are economic headwinds and below-average staff turnover. McKinsey plans to restructure its back office and eliminate 1,400 positions. And the world’s largest consulting firm, Accenture, plans to lay off 19,000 employees.
Survey author and Lünendonk managing partner Jörg Hossenfelder comments: ‘Clients across the globe are responding to the current economic situation. The multiple crises are also leading to uncertainty and commensurate restraint. Business consultancies, too, are themselves tightening their belts when it comes to recruitment and investments at the start of the second half of 2023.’
The initial cost-cutting programmes will primarily affect back-office staff. Internal support services – functional areas such as research and analysis, team support and design – are bearing the brunt of the majority of job cuts. ‘Consulting companies have also made higher-than-average investments in new hires post-Covid to meet strong demand,’ says Hossenfelder.
Opportunities of AI
The likelihood is that other consulting firms will follow the example of Accenture and McKinsey, with staff cutbacks imminent. Alongside recent energetic recruitment drives, the many opportunities provided by AI tools also play a key role in reorganisations.
Looking to the future, companies should strengthen both their resilience and transformational capacity. This is where the manifold possibilities of artificial intelligence come into play for white collar workers – that is, for consultants too.
Cooling of the consulting business?
These factors may be viewed as early indicators of a cooling of the consulting market. Survey author Hossenfelder comments: ‘Thus far these fears have not been realised, and with the passing of time it will be easier to understand the full impact of job cuts. Our new Survey does, however, show that the educational background of consultants has constantly changed over recent years. Interdisciplinary teams and with the ever-present demand for digitisation and IT know-how require a variety of skills.’ During the year of the pandemic, the issues of remote consulting and self-organisation rose in salience. Now it is digital competencies that are rapidly gaining in importance.
About the Lünendonk Survey
The new comprehensive Lünendonk Survey 2023 ‘Business Consulting in Germany’ was published at the end of July 2023 and can be ordered from www.luenendonk.de/en at a price of €2,400 plus VAT. For this year’s Survey, 71 business consultancies operating in Germany were interviewed during the period from February to May 2023. This survey series has been conducted annually by Lünendonk & Hossenfelder for over 30 years.
