I recently did an analysis on the German consulting market. I understand that tech start-ups are somewhat of a hype right now. But consulting is not the glamorous alternative anymore.
After years of high growth the market for management consulting, traditionally an early indicator for economic shifts, grows slower and margins of the top consultancies are deteriorating leaving the entire market vulnerable to price shifts across the board.
New in-house consulting units quickly learn from archetypes and replace external consultants gradually:
-Margins decrease since high value projects are not contracted out
-Higher competition for remaining tenders with mid-sized customers
-Moderate growth in demand is captured by in-house consultants
Management consultancies need to reconsider their generalist positioning as clients request more experts. Demand for implementation in addition to pure concepts puts new requirements on structures and costs of consultancies. Career models of consulting as a stepping stone starts to be outdated as market conditions limit potential for fast track careers.
Some of the players in the market start to react and activly work on their business model. Some seem still to hope, that pre-crisis conditions will eventually return.