Grouping clients together based on common behavioural traits is always challenging in the professional services context. Clients’ needs and the factors they take into account when choosing which firm to use can change rapidly. Especially where large-scale work is concerned, decisions are very rarely made by one person acting autonomously. Continuing a shift we first observed during the pandemic, buying decisions now tend to be made by senior leadership teams in collaboration, as they are trying to align priorities and expectations across multiple business functions.

In this environment, we need to look beyond standard ways of grouping buyers (geography, sector, organisational size, etc.) and understand instead the extent to which clients’ thinking is now being shaped by a very challenging economic environment.

Business confidence remains low and is only showing marginal signs of improvement.

It’s a similar picture where future investment is concerned: 82% of clients in our Q3 2023 survey say their ability to invest has been compromised as a result of the economic situation, somewhat better than the 90% that said this was the case in the previous quarter. Despite this, more than half of clients (58%) say they expect to spend more on external support in the next 18 months. 

Against this backdrop, client confidence is emerging as a major factor driving differences in client behaviour, as the table below illustrates. Among “confident” clients (those who said their confidence hasn’t been damaged by their economic environment), less than 10% say they’ve made significant cutbacks in investment in their functional areas and/or cancelled projects outright. There is a similarly low proportion that feel that their ability to invest in the future has been significantly reduced. By contrast, more than eight times as many “crisis” clients (59%) say they’ve reduced investment, and more than four times (38%) as many say they’ve completely cancelled investment projects. Six times (59%) as many think their ability to invest in the future has been significantly impaired.  

What’s important here is how that translates into their future use of external services: Twenty-two percent of confident clients expect that use to increase, while 39% of crisis clients think that will be the case.  

This is the direct opposite of what we saw towards the end of the pandemic, where clients who felt that life was back to normal were anticipating a higher level of consulting spend than those who were still struggling with the pandemic. This points to a shift in client sentiment, with—at least in the short-term—demand for consulting and other professional services now being driven more by clients’ fear of what will happen next rather than by post-pandemic ambition and the desire to grow.   

Why the change? The shift in sentiment may be the result of the fact that clients now face a range of very different hurdles, whereas the pandemic was essentially one immense challenge. But it also appears that the Great Resignation of 2021-22 has had a material impact on clients’ ability to respond to the poly-crisis. Asked about people-related challenges, confident clients point to resistance to change and the problems in making the hybrid model really work. Crisis clients, however, say they lack the right skills—in other words, they’re more likely to need external support to help cover temporary staff shortages and to supply specific skills.  

As we’ve noted in these updates before and we now explore in a new report, staff augmentation is critical to future growth in the professional services sector.