MBB 's relevance after COVID-19

Bain BCG covid19 MBB McKinsey
New answer on May 05, 2020
13 Answers
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Anonymous A asked on Apr 29, 2020

Will top strategy consulting firms (BCG, McKinsey, Bain & Co.) manage to stay relevant after the social and economic disruption caused by the corona pandemic?

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Ben
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replied on May 01, 2020
Ex-McKinsey EM | Experienced interview coach (1,000+ sessions) | Discount on 1st session | LBS MBA

Hi there,

The consulting industry is not immune to the crisis. Businesses are tightening their budgets, prioritising near-term cashflow and cancelling expensive projects, especially those focused on revenue and growth. Consulting firms are taking a hit. According to research done by Consultancy.org, the global consulting industry could lose up to $30 billion in revenue in 2020.

graph impact of coronavirus on consulting industry

The good news are that consulting firms tend to be highly adaptive by nature, have demonstrated their resilience and flexibility in previous crises, and industry experts expect a fast recovery after the crisis.

Once we are back to “normal”, large businesses are likely to require a lot of support in cost cutting, supply chain redesign and restructuring. Private equity firms will be “hunting” for bargains among the thousands of distressed businesses, and public sector organisations, many of which were “caught with their pants down”, will need help in preparing for the next wave of COVID-19 or the next pandemic.

One crisis example to learn from is the Russian default in 1998. Bain and BCG have left Moscow during the crisis, while McKinsey stayed and captured the post-crisis recovery work and clients. Bain and BCG returned since, but had to discount heavily to get any business. They will not repeat the same mistake.

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Thomas
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replied on Apr 30, 2020
150+ interviews | 5+ years experience | Kearney & Accenture | Sold consulting startup| London Business School

As the others rightfully mention this is likely not the case. There will be a short-term impact, but this is mainly to preserve the cash position. In the medium and long-term, there will be a lot of new projects stemming from this current situation. The nature of the projects will shift in some industries to more cost-cutting than top-level growth.

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Francesco
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replied on Apr 30, 2020
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Hi there,

in terms of the consulting industry overall, I don't see reasons why it should suffer long-term from the virus. Consulting companies are in the business of “lending” brains to companies to fix problems. They may suffer as a sector long-term only if companies find a substitute to solve their problems different from hiring smart human beings as experts.

Obviously, individual companies may be affected as in every industry due to bad decisions, so maybe in 10 years the top companies won’t be the same as now, as the story of Booz shows, but the industry overall should not have issues to continue to grow.

Best,
Francesco

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Adam
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replied on Apr 29, 2020
Ex Bain/ A.T. Kearney: Principal with >10 years global consulting and recruiting experience and >150 interviews

MBB will definitely remain relevant. Consulting firms thrive in times like this since they help clients to work through the challenges raised by difficult issues such as COVID. Firms face decisions around how to adapt their operating models and which investments to accelerate or stop altogether. External expert perspectives are greatly valued to help frame and make the right decisions.

All consulting firms may change their operating models temporarily and this could lead to more virtual teaming and remote working. This could lead to some lasting changes in some cases – perhaps more off client premises work, but the case solving process does benefit from the team being collocated so I would expect us to eventually go back to more or less the previous status quo.

Hope this is helpful.

Kind Regards,

Adam

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Anonymous replied on May 05, 2020

Hi A,

MBB will definitely stay relevant after COVID, but probably will slightly change its focus from strategy to cost cut management and restructuring, and turn around for companies as well as digitization. These two types of projects will become even more common.

Hope it helps.

Good luck!

Best,
André

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Luca
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replied on Apr 30, 2020
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Hello there,

Sure, a global crysis doesn't mean that you don't have projects (think about cost cutting or restructuring process and about all business plans that have to be reviewed). Especially after such a disruptive event, companies have to think how to adapt and transform themselves. Consulting market could shrink in this year but in a long term view all of these are good opportunities for consulting companies.

Best,
Luca

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Antonello
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replied on May 01, 2020
McKinsey | MBA professor for consulting interviews

Yes, they will be. They are going to embrace all the transformations that this crisis will cause.

Best

Antonello

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Axel
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replied on May 01, 2020
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I do not see COVID-19 having any particular long term impact on the consulting industry at least from the perspective of demand for consulting services. There are other trends that have a bigger impact on that, most notably the general digitization of the economy and increased prevalence of data-driven decision making in many companies.

I think the way this plays out is that you see a temporary dip in demand due to the uncertainty that COVID-19 causes and as CFOs and finance directors look to reduce any discretionary spending.

Once this situation has played out there will be significant demand for restructuring, cost-reduction, organizational projects as companies are adjusting to a new reality.

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Emily
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replied on Apr 29, 2020
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Hi there,

Yes I believe they would stay relevant. The consulting market might be slower now due to COVID and due to a lot of clients are taking some time to get used to the new remote way of working (and some might have tight financials at the moment), but eventually when the situation goes into recovery mode, quite a lot of companies would need to readjust their strategy, business model, and way of working etc. to adapt to the post COVID world as there would be changes in consumer needs and market dynamics etc. That's where top consulting firms can help again. If you read the articles by MBB, you'd notice that they have already been looking into how companies can win in the post-COVID world.

Cheers,

Emily

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Tamara
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replied on Apr 29, 2020
Ex-McKinsey Project Manager with experience in Switzerland and Latin America

Without adding too much of the same:

Situation right now:

- most projects shifted from whichever topic to COVID response teams (when asking around you might be surprised that some offices are fully utilized/few people on the beach)

- once this is handled they will shift back to the original topic

After COVID calms down I would see an increase in restructuring (some business might have to be slimmed down/divested) and digital projects to adjust to the new normal.

Hope that answers your question.

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Clara
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replied on Apr 29, 2020
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Hello!

I could understand if other consulting companies struggle, but MBB are far too powerful and well rooted to be qualified as "not relevant"

Think for instance of the Lehman crisis. Did this one erase them from the map? Neither will this one.

They will struggle just as all the market will do, but also re-invent themselves -as all market too- and find a new normal.

Cheers,

Clara

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Udayan
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replied on Apr 30, 2020
Top rated McKinsey coach with many offers /Ex McKinsey EM in New York /6 years McKinsey recruiting experience/Real cases

They already are- take McKinsey for example, it is advising both the White House and the NY state on how to proceed next.

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Anonymous B updated the answer on Apr 29, 2020

Yes, even right now they are staying relevant.

For example, McKinsey and Deloitte are being hired by NY State to develop an opening plan (1), and BCG has been hired to assess the economic impact of Covid-19 (2).

Undoubtedly their revenues will be impacted this year or even the next 1-2 years, but I don't see why they, and the consulting industry as a whole, will be come irrevelant. Business problems will still exist and only get more complicated.

Now, if the question was about smaller firms, then it would be more difficult to tell simply because they are often not as diversified and cash rich as top/bigger firms.

(1) https://www.cnbc.com/2020/04/16/new-york-taps-mckinsey-to-develop-a-trump-proof-economic-reopening-plan.html

(2) https://www.budget.ny.gov/pubs/archive/fy21/ny-covid19-economic-impact-prelim.pdf

(edited)

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Ben

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