In forthcoming research, we focused on the fortunes of four key sectors in the consulting industry (energy & resources; financial services; healthcare, pharma & life sciences; and technology, media & telecoms) in six major consulting markets. Because this is a repeat of research we carried out late last year, it provides a chance to see how client sentiment has shifted.

Clients are now more likely to say the macroeconomic environment is having no impact on their confidence than they were last year—29% in July 2023 to 20% in November 2022.

Why? Last year, the very small percentage of clients whose confidence hadn’t been impaired by the uncertain environment attributed their relatively optimistic outlook either to their ability cope with the challenges they were facing or to their focus on familiar domestic markets. This year, a fifth of those who say their confidence has not been damaged say it’s because they have extensive international operations. Global reach, then, has gone from being a liability to an asset.  

And it’s not the only reason for greater confidence: Nineteen percent of clients say they know how to respond to the challenges that are arising and that they’ve got the right workforce in place, 16% that their costs are manageable, and 15% that demand for their products and services hasn’t fallen. The most important reason for confidence, though, is that clients are better able to respond to the economic situation because they have the right information about their markets and operations (28% said this was one of the main reasons why their confidence hasn’t fallen).  

This growing sense of confidence, albeit in the face of continuing adversity, is changing the types of conversations taking place at the senior leadership levels of client organisations. Last year, the three most common conversations were around productivity improvement/cost-cutting, how best to ensure that employees were adapting to (largely technical) change, and how to manage risk more effectively. This year, while the focus on productivity and risk remains, these topics are more likely to be eclipsed by discussions around technology. And, perhaps more significantly, exploiting opportunities for growth is ranked fourth, selected by 21% of respondents, compared to 13th last year, when it was selected by just 10%. 

Our research suggests that the changing nature of these leadership conversations will result in different investment priorities over the next three years. The one constant is a willingness to invest in new business models—indeed, this investment looks set to eclipse the rush to digital transformation that’s been a feature of clients' spending since late 2020. From the clients we interview, we still hear a lot about digital transformation, but there are growing concerns, just as there were pre-pandemic, around the value being delivered, especially given the money clients have already invested. Clients’ willingness to invest in new/emerging technology over the next three years has also taken a hit, but less so than in digital transformation, likely buoyed by interest in AI. Expectations around ESG/sustainability investment have fallen, but not by as much as we might have anticipated given the economic environment.

This research didn’t ask directly about investment in growth (future research will), but there’s one statistic here that suggests that, alongside productivity improvement, clients will be spending on growth in the future. The proportion of executives who think that they’ll be investing in inorganic growth has quadrupled, from 11% last year to 45% today. 

What really matters? The “polycrisis” hasn’t gone away, but clients are more inclined to feel they have the measure of it. That means that, while they’ll continue to hammer down costs where they can, attention is turning to how they can grow in a complex and challenging environment. Consulting and professional services firms need to be prepared to shift their focus, too.