The Coronavirus outbreak marks a major blow for consultants. However, like any crisis, it could also present an opportunity, according to the leaders of four global strategic consulting firms.
The global outbreak of the Coronavirus, also known as Covid-19, has seen the potentially deadly disease cause a wave of panic to travel and movement around the countries afflicted so far. With the number of global cases now close to 200,000 and the death-toll around 7,000.
The consulting industry has already been noticeably impacted by global pandemic in a number of ways. Consultants are regular travellers, making them particularly susceptible to the virus’ spread, while the financial downturn the pandemic seems almost certain to provoke will likely have a large impact on their revenues.
Indeed, the last financial crisis of 2008 saw demand for consultants drop sharply, bringing many firms into a contraction they would spend the last decade recovering from. This time, however, the leaders of the German wings of four leading strategy consulting firms say that the mid-term outlook for the consulting market is rosier than during the financial crisis.
Matthias Tauber, the Germany boss of Boston Consulting Group (BCG) said the firm had looked at epidemic crises over the past 100 years, and “in all cases, a V-shaped economic development was recognisable.”
In this particular case, the hope for consultants is that clients will only delay their major transformation projects, instead of cancelling them all together; meaning things would be back on track in a few months.
This relies on two assumptions. First, that Coronavirus will swiftly die down across the world – as it presently seems to be doing in Wuhan, where the epicentre of the outbreak has seen new cases drop into single figures for the first time. Secondly, this relies on the other outbreaks being comparable, even though they occurred at different moments in the economic cycle.
As noted by recent research by Sonic, markets do seem to rebound after outbreaks, however when they occur it is rarely on the cusp of an economic slump – rather it is marginally after one, or during a boom, meaning growth is able to easily resume either way.
If these assumptions do prove to be right, then Tauber’s assertion may prove correct.
Opportunities For consultants
Reinforcing the expected rebound for consultants is the fact that digitisation is a trend that is here to stay. In today’s rapidly digitising world, organisations can no longer disregard automation and the adoption of technologies, and digital is key for any business to survive in a post Coronavirus world. While the pandemic may delay the trend, digital will remain the largest business driver of consulting spend.
“Many companies are wondering how to deal with the situation and the economic consequences. And that’s why consultants are still in demand.”
Meanwhile, Covid-19 also brings opportunities for work in restructuring or cost-cutting programmes – something consulting firms have already been enjoying plenty of amid a sustained economic slowdown. At the same time, the strains placed on businesses in terms of human capital means that HR consultants specialising in employee benefits will be called upon due to the heightened importance of employee leave.
Work in e-commerce (particularly relating to food) is also receiving a boost and in the supply chain landscape, clients are tasking consultants with examining and reorganising their global supply chains as they seek to their dependence on COVID-19-vulnerable suppliers.
Meanwhile, in an M&A context, Coronavirus is also making companies cheaper to buy – meaning firms which advice on such matters will also be called upon by quick dealmakers for their expertise.
As Stefan Schaible, Global Managing Director of Roland Berger, put it to Handelsblatt, “Right now, many companies are wondering how to deal with the situation and the economic consequences. And that’s why consultants are still in demand.”
Similar to the employees of their clients, the large majority of consultants are now working from home. This, however, is not stopping them from remotely serving their clients, said Martin Eisenhut, Germany Chief Executive of Kearney. “Many customers are now increasingly relying on video conferences and virtual collaboration instead of physical meetings. It is working surprisingly well so far,” he confirmed.