Contributors
Chief Executive Officer
December 18, 2024 • 6 Min Read
The consulting industry was a completely different animal when I started in this business nearly three decades ago. Each and every technology advancement and market shift—from the prioritization of customer and employee experience to ERP and the digitization of processes—has had a profound impact on the way consulting work is done.
While we see disruption in every industry, the nature of consulting, which depends completely on the changing needs of clients, makes the profession particularly susceptible to macroeconomic shifts. The latest massive disruptions in consulting have been driven by growing AI and digital transformation investment, changing views on the role consultants play, and the challenges employers continue to face in filling skills gaps.
01.
AI and Digital Transformation Drive Workforce Investments
Nearly three out of four companies with at least $500 million in annual revenues are spending upward of $5 million in digital transformation projects this year alone, according to new research that RGP recently released. Not surprisingly, our research found that half of financial decision-makers report a growing urgency to better leverage AI and automation as the biggest impact on their investment in workforce development in the next 12 months.
With the advent of a new era of business caused by digital disruption and AI, I have found that senior management teams are tightly holding the reins on high-level strategy work and shifting that work to internal teams. This kind of work was the bread and butter for large professional services firms, and now that work has dried up.
02.
Leaders Look to Outside Talent to Execute Strategy
On the other hand, senior management leaders do understand that they need consultants to help them execute their strategy. Outside consultants are well-suited for transformation and change initiatives that require execution with faster turnarounds, shorter project time frames, and increased precision.
I have spoken with leaders of corporations, and they tell me they find it much more efficient to leanly staff transformation projects with internal employees and then find the skill sets and talents they need for special projects through consultants and independent contractors.
A study conducted by RGP showed higher success rates on transformation projects that use a mix of internal and external talent, which we have termed a Dynamic Workforce™.
03.
Talent Shortages Spur Workforce Innovation
Beyond transformation work, low hire and separation rates have put even more pressure on employers to fill skills gaps with outside talent. Talent shortages have been most pronounced within sectors such as accounting and IT, but no professional industry has been immune to labor challenges.
More than 40% of financial decision-makers RGP surveyed said their organization’s skill gaps have widened or remained the same since the start of 2024, with the biggest talent shortages cited within cybersecurity, AI and digital transformation.
Massive AI investment will continue to reshape the consulting industry in 2025. Bloomberg reported that Amazon, Alphabet, Meta, and Microsoft alone are spending more than $200 billion on AI this year. Flexibility and agility will remain essential on both the supply and demand sides, regardless of what other changes and disruptions occur in the coming year.
And, while client needs will shift, at the end of the day, the consulting profession was built on human insights and expertise. I believe that work, delivered in new and multi-faceted ways, is precisely what will continue to make it flourish.
