Last year’s predictions: Were we right or wrong?

In January 2023, we made five predictions about the consulting and wider professional services sector.

1. Clients will spend more on consulting services, despite macroeconomic uncertainty

In 2021, in the post-pandemic boom, everything grew—every sector, every service, and every geography—fuelled by a combination of pent-up demand for change during the pandemic and a zeitgeist that encouraged us to think we’d entered a new era of innovation and economic growth. But Russia’s invasion of Ukraine in February 2022 both revealed and amplified economic and political uncertainty.

At the start of the year, we predicted that the consulting market would grow by just under 8%, down on the previous couple of years. However, we provisionally think that that rate of growth was significantly lower, around 5%*.

Even that latter figure may sound too positive to some, but it takes into account a surprisingly strong start to 2023, which was followed by a sharply negative change since the summer, especially in the US. Europe fared worse in the first half of the year, but we heard from firms in Europe that pipelines have shown tentative signs of recovery. Elsewhere the picture is mixed. The Gulf region is likely to be the area of highest growth, while China is likely to be an increasingly difficult market for global professional services firms to operate in.

Looking ahead across 2024, we see the potential for some improvement later in the year, largely because there’s been very little improvement in client organisations’ capacity to get things done. Staff augmentation may not be a market many consulting firms want to focus on, but it remains one of the most important reasons why—we think—there will continue to be some growth. However, even this modest improvement in the rate of growth heavily depends on client confidence continuing to improve, albeit at what is likely to be a glacial rate, and on there being no further major shocks in the political and economic landscape.