8 Challenges Facing the Consulting Sector After the COVID-19 Pandemic

The effects of the COVID-19 pandemic changed traditional consulting models, creating new challenges for the sector and pushing it to innovate.

The global changes resulting from the pandemic put significant pressure on the consulting sector. Data shows that the value of the consulting market before the pandemic was as high as $160 billion, but it fell to $132 billion in 2020. This decline led to new challenges that hindered the work of consulting firms.

The consulting market was completely saturated before the pandemic and has become even more competitive since. This has forced consulting firms to quickly adapt to the ongoing changes and adopt new work strategies to ensure their survival.

The stability and growth of these companies primarily depend on the effectiveness of their business environment analysis procedures and their ability to arrive at appropriate solutions.

As the changes imposed by the pandemic on the consulting sector continue to accelerate, consultants must translate these shifts into threats or opportunities.

Challenges Facing Consulting Firms Post-Pandemic

Here are eight challenges facing the consulting sector after the COVID-19 pandemic:

1. Digital Transformation and the Shift to the Hybrid Work Model

The importance of remote work increased significantly during the pandemic, and this trend has continued. This means digital transformation has become essential for the consulting sector's success. Consequently, adopting this transformation must be prioritized, as it is a significant trend and challenge in today's market.

Consulting work, especially the administrative part, will soon be significantly automated. There will be an increasing reliance on remote work technology and the digital delivery of services, which poses another challenge for consulting firms: speed in work and delivering proposals within relatively short timeframes.

The concept of digitisation is broad, but let's discuss just the digital marketing section. When clients need a consulting firm, they immediately turn to the Google search engine to find a company that offers professional consulting services. They then browse social media, content platforms, client reviews, etc.

As the leading European expert in predictive HR analytics, Luk Smeyers, says, the new reality is unforgiving. A consultant must have a high level of expertise, influence, and credibility to establish their presence.

Your online profile plays a crucial role; it is the deciding factor for the client on whether you are an expert in the field. The client will prefer your competitor if your profile is not convincing enough, so you must comply with Google's algorithms to rank at the top of search results.

2. Maintaining Digital Security

Consulting firms also face the challenge of maintaining cybersecurity due to digital transformation. Andrew Duncan, Partner and CEO of Infosys Consulting in the UK, emphasises that ethical considerations must be an essential part of consulting work, and they are heavily affected by automation technologies.

Consulting firms receive and process confidential client information that could be leaked if cybersecurity rules are not complied with. This could lead to reputational damage, loss of contracts, and even legal accountability.

Artificial intelligence can be an effective solution to this problem, as it can be used to control automated systems. AI can help reduce risks while achieving efficiency and speed in work. Smart automation helps reduce the risks of human error and lowers operational costs while maintaining the quality of results.

A new challenge arises with this solution, which is complying with regulatory requirements and preventing algorithmic bias, which consultants must take into account when encouraging partners, clients, and employees to use AI.

3. Standing Out from Competitors

The high competitiveness in the consulting sector is one of the most critical challenges in the post-pandemic world, where clients can choose from a wide range of consultants with just one click. Companies must adopt a new competitive mindset and demonstrate unique competencies to establish themselves in the market.

To begin with, companies need to move from generalisation to specialisation with a focus on expertise. Consultants must have a holistic vision and understand the organisational context. The secret to consulting work success is combining a deep focus with that holistic vision.

Unlike unorganized, generalist competitors, specialists will enable consulting firms to maintain their position and attract potential clients.

Consulting firms prefer a generalist approach for fear of losing clients. For example, a company may accept many tasks, reschedule them at the client's request, and may repeat work on the same project several times, which makes clients take the consultants' efforts for granted.

Another challenge in the consulting field is the inflation of business volume due to trying to maintain income. Therefore, defining a specific target audience that values your expertise is wise.

4. Innovating and Implementing New Ideas

Crises do not necessarily lead to a company's decline. Instead, adopting an innovative approach can give them a golden opportunity for growth and prosperity. New ideas can generate new projects that attract potential clients, but consulting firms need to adopt a new mindset to be ready to seize these opportunities.

Innovation is a crucial factor in consulting work, and it means finding or creating new ways to provide value to clients. Research has shown that approximately 75% of companies consider innovation one of their main priorities, and 35% place it first.

However, statistics indicate that only 30% of companies are truly good at innovation. Consulting firms must encourage clients to think creatively and suggest alternatives to promote innovation. They must thoroughly understand the client's vision, whether it is applicable, and how easy it is to implement.

They must also adopt a clear strategy and support the client's team by guiding innovation processes. Finally, they must ensure that their product or service is ready for launch in the market.

Innovation is one of the most prominent challenges in the consulting sector, given the difficulty of implementing new and creative work strategies.

5. Understanding and Meeting Client Expectations

In our digital world today, clients have become more demanding. As a study titled "Insight to Action—The Future of the Professional Services Industry" showed, clients are asking for quick results at a lower cost and higher quality.

They also focus on transparency and accountability, which has complicated new consulting projects. All these changes began during the financial crisis caused by the pandemic, which led to a reduction in consulting expenses and increased scrutiny when choosing companies.

Clients expect consulting firms to be highly experienced and reliable, which makes earning and maintaining client trust a real challenge in the consulting field. Two fundamental problems arise for consulting firms: finding new clients and retaining old ones.

New clients can be attracted through successful partnerships with previous clients, while keeping old clients requires consulting firms to develop and maintain good relationships with them.

This can sometimes be difficult due to the very high expectations of some clients with limited budgets. In this case, your role as a consultant requires you to convince the client that your professional service will be profitable for them in the long run.

Therefore, it is critical to try to understand your clients, their personalities, and their goals, and to verify that the promotional content is compatible with the needs of current and former clients.

Only a precise understanding of these and other details will enable you to pave the way for your future in the constantly changing consulting sector. Understanding clients is also one of the biggest challenges facing IT consulting firms.

6. Attracting New Talent

Most consulting firms adopt strategies that focus on maintaining their reputation as a leading company that attracts the elite of experts and their experience in this competitive sector. This fierce competition always requires consulting firms to try to hire new individuals who are enthusiastic and able to work under pressure, while also being willing to learn and develop, as companies depend heavily on the quality of their employees.

Daniel Nerlich, founder of the online magazine for professional consulting, the Consultant Career Lounge, recommends several strategies to convince potential talented consultants to join your team. These include enticing them with money or promising them work flexibility that will give them more room to balance their personal and professional lives.

Another attraction is the promise of professional and personal development and participation in the decision-making process. These promises, of course, come with responsibilities. When a promising and essential consultant joins the team, the company's responsibility is to develop and grow their skills.

7. Crisis Management

The COVID-19 pandemic was a sudden event followed by unexpected repercussions and crises, but this experience helped us realise the importance of crisis management. Companies realised that continuity requires identifying potential crises before they happen and developing strategies to deal with them effectively. Therefore, crisis management is considered one of the challenges facing management consultants.

Responding to crises may sometimes require special measures that violate traditional rules and what was previously followed. During the pandemic, for example, crisis management required a shift to remote work and a change in travel policies.

Crisis management consultants support clients to ensure their companies take swift action in sudden circumstances. These consultants identify and analyse the crisis, then offer and recommend the best solutions, which allow clients to adjust work procedures and respond to ongoing changes.

Crisis management consultants aim to reduce or avoid damage and protect people and the environment. This poses another challenge in the consulting sector because it is complicated to predict all potential crises and damages that may occur, as was the case with the pandemic.

8. Addressing Work-Life Balance to Reduce Employee Turnover

The consulting sector requires high-quality services and working under tremendous pressure, which leads to burnout that drives tired consultants to leave their jobs in search of a better work-life balance.

Research by Consultancy.uk showed that 76% to 100% of consultants work extra hours beyond those agreed upon in their contracts to meet the demands of their jobs.

The average overtime hours in strategic consulting firms were 20 hours per week, reinforcing the sector's reputation as an extreme work environment.

Consulting firms that want to retain talented and distinguished consultants must address the issue of overtime hours, especially today in the post-pandemic world, which is characterised by the Great Resignation, the increasing adoption of hybrid work models, and the desire for a better work-life balance.

High financial compensation and additional benefits can motivate consultants to a certain extent, but they will lose their appeal at a certain point.

Consultants will lose their enthusiasm for work, for example, when they realise they do not have time to spend the bonuses they received. When employee satisfaction decreases, "voluntary turnover" will begin.

Employee turnover costs up to 150% of an employee's salary if they are in technical resources or senior staff. This also disrupts project delivery and increases the risk of clients leaving your company when their favourite consultant leaves.

Accordingly, consulting firms should prioritise addressing work-life issues and long working hours in the post-pandemic period due to the negative consequences of ignoring these factors.

In Conclusion

Although the pandemic negatively affected the consulting sector, it also provided many opportunities. The advanced technology we have today has allowed for the adoption of remote work models, which have created opportunities for many specialists worldwide.

Digitisation also played a pivotal role in bringing consultants closer to their clients. Every opportunity comes with challenges consulting firms have faced, and this article has discussed them.

Consulting firms must adjust their strategies according to the current variables and challenges. When they overcome these difficulties, they will increase their chances of success and prosperity in the competitive consulting sector.