A sector-by-sector view: Attitudes to crisis are guiding investment priorities
Forthcoming research into consulting clients’ attitudes in five key sectors gives a sense of future investment priorities across the professional services market overall.
Confidence levels remain low across all five sectors, but as we also saw in our quarterly survey of client sentiment for Q4, the proportion of executives who say their confidence is depressed by the current economic environment is somewhat smaller than it was earlier this year, at around 70% compared to 82% in Q1. That’s good news for firms, but beneath this headline data, there is some important variation.
Pharma & life sciences and healthcare organisations are the most confident. Pharma executives attribute their relative optimism to having the right information about their markets and operations, while healthcare clients tend to say that their confidence stems from a combination of factors: having a clear sense of direction and the right staff, both of which in turn facilitate faster decision-making.
After the extensive layoffs and restructuring last year, the confidence of TMT executives has recovered somewhat and now sits around the overall market average. A third of executives in this sector also say that having the right information has been key to their improving outlook, significantly ahead of any other factor.
Although the proportion of financial services clients who say their confidence is not reduced is similar to that in the TMT sector, this is more than offset by the high proportion—34%—who describe their confidence levels as significantly reduced. Growing concerns about exposure to defaults caused by higher interest rates is the most important dampener of optimism, cited by 21% of financial services clients.
At a time when energy costs and consequently profits are high, we might have expected to see the energy & resources sector to be more optimistic, but—in line with other research we’ve carried out recently—that’s not the case. E&R clients are most likely to attribute their relative pessimism to consumers economising on use, to international operations that are being complicated by political uncertainty, and to a shortage of key talent to help manage these challenges.
Clients’ views about their confidence levels in Q4, by sector