World leaders met the week before last at Davos to discuss the political and business influences that will shape 2018. Many of the key trends echoed what we've heard from clients and consultants – from disruptive technologies to sustainable business models, the consulting industry can expect to see more changes over the coming year.
The UK's consulting market has exceeded economic growth over the last three years expanding by £1.5billion and now has an estimated worth of £7billion. Forecasts for levels of growth in 2018 vary as the impact of macroeconomic forces are still uncertain. But if strategy and management consultants adapt to clients' new demands, the consulting industry can play a key role in enabling the major business changes expected this year.
So what are we set to expect for the coming year in the consulting sector?
Artificial intelligence was one of the 'hot' topics that gained attention in 2017 and we will see wider adoption become a reality in 2018. Companies have started to utilise advanced analytics and machine learning to optimise the customer experience that they can offer and improve efficiencies in their operations. 2018 will see a significant uptake across every industry as it becomes crucial for businesses to engage AI to stay competitive.
Indeed, it's not just the advent of AI to look out for but, with other disruptive digital technologies such as blockchain also emerging, companies will need to assess how they can integrate complementary technologies across the business. Global IoT Leader for EY, Aleksander Poniewierski expects these technologies to converge under 'a single digital disruption umbrella' with clients looking for integrated 'Intelligent Automation solutions'.
Consultancies have already started preparing for the increase in demand for skills in data analytics and even machine learning, with many bringing these skills in-house through hiring or upskilling their existing consultants. We anticipate that this year analytics and digital technology capabilities will come to the forefront of corporate strategy as clients seek business-wide solutions.
People still matter
Talent will not fall by the wayside. Despite dark predictions by some that advances in technology would deprioritise organisational development, industry leaders are showing a renewed focus on people.
A recent report by the McKinsey Global Institute shows that 60% of occupations have at least 30% of activities that could be automated which, when realised, will change the nature of jobs across industries. This will make it more critical than ever for leaders to drive value creation from human capital and place equal weight on talent and HR as they do on financial capital.
Companies need to upskill their current employees, as well as hire and retain the best talent to stay competitive and drive growth. McKinsey's Global Managing Partner Dominic Barton observed at Davos that talent would be a key CEO priority in the forthcoming year and 'crucial to building enduring institutions that can survive and thrive in turbulent times'.
The social innovation imperative
All businesses now face the need to innovate in a socially conscious way to attract both customers and talent. Tech giants are a recent example who have been heavily criticised on two fronts; not prioritising the development of solutions to prevent harmful content, and inhibiting innovation in the sector by holding monopolies.
BlackRock CEO Larry Fink called on top CEOs in his pre-Davos letter to drive social responsibility in business, telling them that 'society is demanding that companies, both public and private, serve a social purpose'. As public pressure continues to gain momentum, businesses must reassess their strategic plans and incorporate a social outlook into their priorities.
2018 will see social innovation leave the dusty shelf of CSR and enter mainstream strategy for corporate businesses.
The consulting industry has seen a slow progression over the last few years towards a more flexible workforce model – this is set to accelerate in 2018. Global economic growth is forecasted for the year and with the uncertainty still surrounding the implications of Brexit, companies will be looking for a flexible, lower risk solution to answer their strategic questions.
However, it's not only industry clients that are moving from traditional consultancies to independents, but the consulting firms themselves are also looking to fundamentally shift their business models and utilise a contingent workforce. This will enable consultancies to bring in more flexible resources to solve capacity constraints, limit an expensive bench of permanently employed consultants, and access a network of subject matter experts for specific client needs.
So with these, and other, changes expected for the consulting industry in 2018 we look forward to seeing the consulting landscape evolve as strategy houses and clients tackle new priorities.
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