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What are the biggest concerns for small to medium service/consultancy firms in Europe
Hello,
Thank you for your question about the biggest concerns for small to medium service/ consultancy firms in Europe, Canada and the US. As per Hinge Research Institute, top challenges faced by consulting firms are attracting new clients, dealing with difficult market (competitive marketplace), retaining talent, constantly innovating themselves and planning issues.
Below you can find a deep dive in to my findings.
METHODOLOGY
As per your request, I first identified the key concerns for small to medium consultancy firm. I have made list of problems in general as well as problems because of digitization. Results of surveys and articles were mainly considered to form this list. Then, I checked other sources to see if consultancy firms in general are receptive to online services for overcoming these challenges (wherever possible, notes about the same has been mentioned).
In a separate section, I have also noted the impact of Brexit on consultancy firms.
(Note- One of the sources- Survey: Digitization of Consulting 2016 has to be downloaded through the link provided.)
TOP CONCERNS FOR SMALL-MEDIUM CONSULTANCY FIRMS
ATTRACTING NEW CLIENTS
As per Hinge Survey, attracting and developing new businesses was the top most concern of a consultancy firm. Over 81% of the 530 respondents of the survey voiced this concern irrespective of the size of their firm.
The survey on digitalisation of consultancy firms by Consultingsearcher and Newcoventure has found that buyer of a consultancy services starts looking for alternatives through online searches, digital market places and professional networks like Linkedin. Hence, the solution to this pain point lies in developing a better online presence. Given this fact, it can be assumed that a consultancy firm would be open to online services that can help improve their presence in search engines and professional networking community.
TIGHT COMPETITION
Competition from different international players was cited as a concern by more than 25% of the respondents of Hinge Research Institute's Survey.
Creating a strong brand image is a possible solution to differentiate a consultancy firm from the rest of the competitors. In general, buyers of consultancy firms state lack of transparency as to what the consultant actually do as a major concern. Addressing these issues can give a better leverage to a consultancy firm over its competitors.
RETAINING TALENT
Retaining talent was a point of concern for over 24% of respondents of Hinge Research Institute's survey.
Unfortunately, I have not been able to find any sources that cite the receptiveness of consultancy firms in utilizing online services for retaining talent.
INNOVATION
24% of the respondents of the survey were of the opinion that consultancy is an industry that requires constant innovation. It is equally important to let the world know about their innovation in order to have a strong standing.
Here again a possible solution is developing a strong brand presence in the platform to communicate with prospective clients and industry influencers.
STRATEGY/PLANNING ISSUES
This was cited as a concern by 24% of the respondents. Being a fast paced industry, the professionals often fail to plan and execute their strategies efficiently.
Here also, I wasn't able to find any sources that specify the willingness of consultancy firms to use online services to overcome this issue.
OTHER CONCERNS OF CONSULTANCY FIRMS
Some of the recent developments in the consultancy industry that are disrupting the industry are-
SUPER SPECIALIZED ENTRANTS
Drifting away from the traditional methods of consultancy, a new breed of specialized consultants are on the rise. They provide specific solution combining state of the art digital technologies like "combination of management consulting , cloud based tech, Big data, AI, Machine learning and other predictive algorithms" These types of companies are growing at an exponential rate and hence, there is a need for all the players to adapt themselves and provide concrete focused solutions.
GROWING CLIENT SOPHISTICATION
A growing number of strategy consultants from major consultancy firms are joining the client's industry. Hence, these clients now don't require strategy consultants, but rather specific deliverables.
EMERGENCE OF FREELANCE CONSULTANTS
There are a number of market places where services of freelance consultants are offered at a much cheaper rate than a traditional consultancy firm. This is eating in to the profits of small and medium scale consultancy firms.
BIG DATA CHALLENGE
With every industry undergoing rapid digitization, consultancy firms are expected to stay ahead of this trend and lead the rest of the industries. This means they have to be well versed in data engineering, agile transformation, platform architecture and configuration and all such advanced capabilities.
IMPACT OF BREXIT
Decline in consultancy business in Europe as a result of Brexit has been very evident in the recent past. Major companies have pulled back on their consultancy contracts and cut down on spending on consultancy and strategy development. In fact in a survey conducted by Management Consultancy Association, one in ten consultancy firms have faced a declined in their business because of Brexit.
CONCLUSION
Consultancy firms are on the verge of undergoing a rapid digital transformation. The consultancy firms are already facing numerous problems like attracting new businesses, retaining talent, innovation, planning issues and tight competition. In addition, digitization is also posing problems like requirement of super specialized technology, infrastructure and capabilities. The results of surveys indicate a scope for a guide that can help a consultancy firm overcome these problems.
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