Are there any threats of substitution for consulting as an industry?
Overview of answers
I see two things replacing/impacting consulting (at least in it's current/traditional state), both driven by technology: clients undertaking work internally, and the emergence of big data / data science.
When excel was still a relatively new tool, most corporate clients would have a relatively limited ability to use the tool to perform analysis themselves. Therefore, they had to hire consultants. Nowadays, tools are much more advanced and accessible, and the generation of analysts/young managers at corporate clients are much more technologically literate. Some of my clients today are even using more advanced tools like Tableau, so many tasks that before could have been an entire consulting engagement are performed internally.
With the rise of data science, and the increased ability of clients to do analysis themselves, less and less projects nowadays have the “traditional” type of analysis you might find in a case – e.g. breakeven analysis, profit line profitability, etc. Instead, I see the majority of projects going into one of two directions:
- highly analytical, using advanced tools like SQL, Alteryx, Tableau, Python, etc.: These are areas with great potential for clients, and areas where most clients are still not that proficient in
- Operational/non-quantitative cases (e.g. operating model re-design, PMO): Where clients are better at conducting basic analysis, consultants can still bring tremendous value through rigor, structure, and communication. Therefore, these
Consulting won’t be substituted – it will evolve with the trends of our time: Parts of consulting have now been “internalized” by clients, and the types of projects are changing rapidly. Of course, this will mean that some players will win, and some will lose – the consulting landscape in 10 years could be drastically different from what it is today.
Not really. Consultants will always find a way to stay a step ahead. A few more things to keep in mind:
1. On average, consultancies have much better people than other companies. All of us former consultants see this first hand as we move back to industry. Brutal assessment perhaps, but a fact nonetheless
2.Consultancies see more best-in-class and worst-in-class examples than individual companies ever will. This gives them a depth of understanding that can't be matched, only hired
3. Half the time, the client already knows what needs to be done, but for whatever reason needs an outsider to say it. No, this isn't just politics - we all need someone to tell us what to do at times. Think of the couch potato who 'knows he should exercise. This will never go away
4. Same line of thought, you sometimes need an outsider to notice what is right in front of you
Consultants will evolve, but they sure won't be going away
PS: For argument's sake, let's now assume they do go away eventually... it won't be for the next couple of years, right? Your best bet as an individual is still to join and get the learning + experience out of it
Could you pls clarify?