Source’s latest data indicates that the global consulting market will hit $263bn in 2024. This represents 6% growth on a challenging 2023. But performance isn’t uniform across service lines. So what’s driving client demand in certain areas and what can firms can do to revive slower markets?

The technology & innovation, strategy, and risk & financial management service lines comprise two thirds of the consulting market

Ones to watch

Cybersecurity: The cyber services market is set to reach just under $34bn in 2024 and, although this is one of the smaller service lines that we track, it is the big winner when it comes to growth. In fact, this service line has experienced the highest growth rate each year since 2021, and it is the only one not to drop below a resilient 7% rate at any point during this challenging period.

The drivers of this investment by clients are clear—cyber attacks on big business and governments are rarely out of the headlines, and clients see this threat as existential, both in terms of the potential financial impact and its reputational damage. Expertise in this area is expensive and in demand, and so clients are more willing to pay firms to gain access to these valuable skills. Cyber is also an area where continuous innovation is needed to keep up with creative criminals, and clients can’t afford to cut corners in this area. It’s also a service where firms may find it easier to provide concrete and quantifiable evidence of the value they have provided, such details of the number and type of attacks repelled, which will make a more compelling business case for investment.

Cybersecurity services growth rates have led the market since 2021

Risk & financial management: This is the third-largest service line and is forecast to reach almost $55bn in 2024. It has parallels with cybersecurity, in that it is a core part of the armoury clients use to protect themselves against uncertainty and external threats, which is no doubt a driver of its above market-average growth today. Areas that are doing particularly well include governance and compliance, as well as financial risk services.

However, with today’s unpredictable geopolitical backdrop, we might have expected to see an even stronger performance than that signalled by our forecast of 6% growth for 2024, which comes on the back of a disappointing 4.6% growth rate in 2023. This may be explained by our experience of risk as a particularly cyclical consulting market—clients have invested hard in their resilience capabilities over recent years and are now dialling back their spend as they benefit from that foresight and manage risk internally. We expect to see that cycle continue back around toward greater investment in external support over the coming years, and so forecast more robust growth of 8% in 2025.

 

Technology & innovation: This is the largest service line we cover and a particularly valuable one for firms. It is set to hit $64bn in 2024, and while its growth rate of 6% in 2023 was beaten only by cybersecurity work, it is now tracking back at the consulting market average.

We might ask why growth in this service line is behind that of cyber consulting and risk & financial management services at a time when emerging technologies are at the top of many board agendas. Like risk, it is another area where clients have invested hard over recent years and have perhaps eased off the accelerator temporarily. Also, clients that we surveyed at the back end of 2023 and the start of 2024 were hugely enthusiastic about understanding the potential of genAI for their businesses, but we haven’t reached the tipping point into large-scale, practical application of this technology yet, and clients appear to be holding fire on consulting investment in this space for now.

The other point is an anecdotal one: In the interviews we have with clients they appear sceptical about whether the investments they have made in technology have quite paid off. This chimes with the findings in much of our client perceptions work this year, which shows that while clients think the quality of work consultants deliver is high, they are less convinced about the value delivered over and above what they invested. Firms that are pitching for work in this space should concentrate on providing evidence of the value they provide, with quantitative data, case studies, and convincing testimonials being a good place to start.

All that said, technology & innovation is still the largest and most lucrative service line, with data & analytics work set to be a particular highlight through 2024 and into 2025.

Technology & innovation remains the largest service line in 2024

Operations: This service is set to reach $39bn in 2024 and is growing at a notable rate of 7%—the second fastest of those we track. In 2023, operations work experienced a boost from clients who wanted to cut costs and increase productivity. However, this is the type of work that clients typically prefer to do themselves in the longer term, so something else may be behind this strong performance. Drivers are likely to include clients reaching out for help implementing all the strategy work that has taken place over recent years. They are also looking for help as they respond to geopolitical challenges: Clients are continuing to reorganise their businesses and their supply chains, and this requires the type of specialist knowledge that firms can provide. We expect the growth rate to settle nearer 5% in 2025.

 

Under pressure

Strategy: This has been a valuable service area for firms over recent years, comprising 22% of the market, and is set to reach $57bn in 2024. However, it was one of only two service lines to decline in 2023, experiencing a contraction of 2%.

Clients spent considerable amounts of time and money strategising during the hiatus of the pandemic, and when 2023 and its new freedoms dawned, they switched into implementation mode and away from planning. The ongoing uncertainty has also made it hard to look too far into the future and has likely dampened appetites for longer-term thinking.

However, our experience also tells us that while strategy work is often the first casualty of any downturn in the consulting market, it’s also the first service to recover. Our forecasting reflects this, with growth of 7% expected in 2025. A leading indicator of this upturn may be provided by a sneak peek into the results of our latest quarterly client survey: When asked about their most important strategic priorities, clients have put exploiting opportunities for growth right at the top of their list. Strategy consultants may be in high demand sooner than they expected.

HR, people & change: This is the real loser in the service line market. It has an expected value of $14bn in 2024 but has shrunk in size for two years in a row (a 6% decline in 2023, and an expected 3% reduction in 2024). This trend can seem strange, as it is rare that we speak to clients who don’t emphasise the importance of their people and highlight the struggles they have with talent and skills shortages. But businesses don’t seem to be willing to pay for solutions in this space. Perhaps it is another example of work that clients would rather tackle themselves, or maybe consultants simply aren’t speaking to the real challenges businesses face here. Clients tell us that some of the terms firms use to describe their services simply don’t resonate: “Workforce planning” can be perceived as yesterday’s challenge. This is such an interesting and nuanced topic that we’ll be devoting a whole leadership market update to it in a fortnight’s time, so look out for that.

Summarising the performance of consulting service lines, cybersecurity looks set to continue on its fast-growth trajectory, while technology & innovation, strategy, and risk & financial management remain the three biggest revenue earners. And all four of these service lines look set to continue to be healthy sources of consulting work as far into the future as today’s unpredictable environment allows us to look.

Emma Carroll, Head of Content, Source

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