By Nathan Simon, Partner at Kennedy Intelligence - Consulting Industry's Trusted Partner for Research and Advisory Services. I Co-Author the Consulting Navigator.

2024 wasn’t a great year for consulting. Many believe it’s just a hangover from the high growth during Covid and the industry is poised for another secular upswing fueled by AI. We’re unconvinced. Our estimate for 2024 consulting market growth of just below 3% is about half the rate of nominal GDP growth. What’s more, this caps a decade over which consulting’s growth relative to GDP has steadily shrunk.

• We believe the double-digit growth rates of 2021-22 were a one-off not a new trend as talent-strapped clients grappled with supply and business-model disruptions.​

  
  

• The past two years were a reversion to the pre-Covid trend as consulting’s digitization trade continued to saturate.

  
  

• To put this in context, consulting markets outpaced GDP growth for six years starting in 2011 as digitization replaced financial deepening as the driver of economic activity in the wake of the global financial crisis. The ERP boom of the 1990s generated over a decade of above-GDP growth.

  
  

• How can it be that clients are reinvesting profits in consulting spending at a declining rate at the same time that the headlines are proclaiming that AI is both unlocking new frontiers for client investment and transforming how consultancies run their operations?

  
  

• We believe finding the answer requires looking at both the demand and supply sides of the market. Our interactions with hundreds of clients reveal that leadership isn’t in a mood for big bets. Instead, it is delegating more authority over consulting to mid-level leaders who prize more discrete, technical services.

  
  

• On the supply side, while we are starting to see some movement, the consulting business model is largely the same as it was 25 years ago. Unlocking new demand in an age of AI will require a model designed to sell value not hours.

  
  

Reach out to enquire about the 2025 Global Consulting Industry Navigator report, which will be published in Q1 to provide one of the most comprehensive reviews of the global professional services market.

Please note: This article is for educational and informational purposes only and does not constitute investment, tax, or legal advice. The intelligence has been gathered from a variety of public and non-publicly available sources, which have not all been verified. reviewed or approved. The views and opinions expressed are those of the author and do not represent the views of any affiliate organization. Any opinions or views expressed are as of the date written and are subject to change without notice and may be updated or modified at any time.