What are examples of threats of new entrants to the consulting industry?

Hi there,

There aren't really any serious new entrants to the strategy consulting market! There are a lot of advantages to size/incumbency (reputation, relationships, costs, labor force, know-how/expertise, etc.).

That said, there are plenty of boutiques opening up all the time! Additionally, plenty of new consultancies are formed all the time in niche areas (Tech, IT, Cyber, etc).

But, in regards to our classic strategy consulting space (MBB, Big 4, etc.), there are no new entrants nor really threats of any.

The main threat is the actual business model changing, but that's exactly why BCG + Mckinsey have invested in their digital/tech capabilities!

Its not as straightforward to look at consulting as that kind of industry.

Consulting is a business of trust.

Trust takes a very long time to build.

Since it takes a long time - its not as much of a threat.

New entrants in consulting are generally focused on filling very niche market gaps. They diversify over a long time. e.g. you have data analytics based consulting firms, you have specific sector focus firms, etc. etc.

But you don't straightaway launch a consulting firm and say that you are like an MBB. The companies will hire MBB and not you. Because MBB is trusted. MBB have been at it for so many decades that it would be like banging your head on a wall to try and compete with them at an equal footing.