How the Corona Virus Impacted Consulting Markets
The COVID-19 pandemic has had a devastating impact on global stock markets. By June 2020, companies on the New York Stock Exchange and NASDAQ had lost nearly 20% of their market value. However, the impact has not been the same for all. According to a BCG analysis, tech-enabled companies, generally those established since the year 2000, performed 27 percentage points better than the rest of the stock market.
What lessons can you learn from this, and how did the corona virus impact the consulting industry and particularly freelance consultants registered on online consulting platforms ?
The Impact of the Corona virus on Consulting Projects
The outcomes for consulting will mirror in the stock market. Researchers from Source Global Research have predicted a 19% reduction in the global consulting market size from $160 billion in 2019 to $130 billion in 2020. This reduction results from poorer economies being pushed towards recession, and consulting projects being delayed, reduced in their scope, or canceled altogether.
By Geographic Region
Europe as the most significant reduction, at 28%. This is primarily because of supply chain disruptions to Germany's manufacturers, a further slowing in Britain, already hit by Brexit worries, and major lockdowns in Italy. The Asia Pacific is expected to have the lowest contraction, at about 12%, and make the fastest recovery.
North America is the world's largest consulting market and traditionally adapts quite quickly to changes. Despite an anticipated 15% revenue drop, it will rebound relatively quickly.
There are differences across industries, with some being better set to weather the storm than others. This will impact the consultants serving these industries. According to the Source Global Research report, the highest revenue reduction for consulting will be in the area of business services with approximately 27%, whereby the slightest decrease in revenue is expected for the pharmaceutical industry.
The dramatic drop in revenues in the airline and leisure industries has significantly impacted Business Services. Restrictions in travel – even to workplaces – will lead to major revenue decreases for the Energy and Resources sector. The Health sector has allocated its resources to treating the virus rather than consulting projects.
By Consulting Firm Type
The impact of corona virus on consulting firms will depend on their reliance on particular sectors or regions. Worst hit are those whose work depends on travel and time on the client's site, so operational improvement and change projects are suffering.
Strategy work that you can do mostly from the consultant's offices may continue. Clients may also be reluctant to shelve long-term technology projects where they have already made a considerable investment.
The more diverse and adaptable consulting firms are likely to survive and those with strong reputations will fare the best. The challenge for everyone is to rebuild pipelines and convert sales. However, building trust and confidence without face-to-face contact has its difficulties, and the ability to refer to past consulting successes will be critical.
As in any crisis, there is an upside for some. In this case, it is for consultants who can work remotely, who can offer services in critical areas, especially in digital and technology fields, and who are flexible and agile in their service offerings. Freelancers on freelance platforms or online consulting platforms are particularly well-placed to avoid or at least navigate the predicted downturn in the consulting market. (More about this later.)
Who have been the Winners through the Pandemic?
There is no question that disruption and innovation have led to success. Technology companies have taken the lead. For example, Zoom had a 20x spike in daily users and increased its share price by 119%. Tesla converted some of its assembly lines to produce ventilators and grew its value by 47%.
Boston Consulting Group describes three approaches to dealing with the pandemic in its survive-thrive-inspire model:
- Some companies have focused on surviving – dealing with shock and uncertainty, monitoring cash flows, stabilizing the business, and maintaining customers, mainly through digital and virtual channels.
- Others have thrived. They have repositioned existing products to meet new needs, sped up new products to market, and kept their brand visible. Uber is a good example – they have partnered with restaurants and online retailers to keep household necessities flowing and drivers driving. Atlassian, the Australian software company, has kept its brand top-of-mind by offering free trials and tutorials of its Jira automation software to assist companies struggling with work shortages and productivity blockages.
- The most successful have inspired. They have become part of the solution, reaching out to those in need and participating in community projects. For example, IBM is leading a consortium that provides high-performance computing resources at no cost to COVID-19 researchers. Large consulting firms have taken similar steps – not least through providing a steady stream of up-to-date information and research findings.
However, it is not just what they do but how they have done it that has led to companies' success in these difficult times. In particular, they have displayed creativity, agility, and discipline.
Consultants might ask themselves what they have done within their own businesses to emulate these companies. And have they applied these insights to the advice and support they are giving to their clients?
Post-COVID Opportunities for Consulting Projects
It seems such a cliché to say that COVID-19 has changed the way we do things – but it's true for just about everybody, and certainly also for consulting. As businesses start to adjust to the new normal (yet another cliché), consultants will be looking for new business opportunities.
The Power of the Online Consulting Marketplace
As noted earlier, social distancing has made it difficult for consultants to build trust with potential new clients. Even in previous crises, companies have tended to use large, established consulting firms with reputational muscle.
However, online consulting platforms provide some of this muscle for freelancers. For example, Consultport vouches for its registered consultants' credentials and provides opportunities for them to showcase references from previous clients. Freelancers can also work together in formal or informal groupings to handle consulting projects that would previously have gone to large firms with diverse skills.
And, of course, as the world has gone remote and companies are looking for different resources, freelance platforms have become a port in the storm. A well-established platform like Upwork has seen its shares rise by 44% because of COVID-era freelancing, and it is giving increasing attention to its enterprise customers.
Consulting After the Corona virus
It would be foolhardy to make firm predictions for consulting post-COVID. However, the crisis has exposed the need for quick viable solutions in response to challenges.
All the signals suggest that tech-enabled freelance consultants who are flexible, agile, and disciplined, and who offer their services via online consulting platforms, are best-placed to be part of the business recovery that must now happen.