By Nathan Simon, Partner at Kennedy Intelligence - Consulting Industry's Trusted Partner for Research and Advisory Services. I Co-Author the Consulting Navigator.
We are advising global consulting leadership teams on competitor trends expected to shape the consulting industry in 2025. Our team gathers proprietary intelligence and data on investment trends shaping the competitive landscape – including M&A, investments, and alliances amongst consulting firms, and strategic plans for further investments in 2025.
Consistent with our overall perspective on consulting, we believe client needs and priorities are the key to understanding the “why” behind current investment activity. Our engagement with clients reveals that their objectives for engaging consulting providers around four overarching strategic agendas (Grow, Optimize, Innovate, and Protect) together with their prioritization of different consultant roles to tackle them are what animates the competitive dynamics driving different parts of the market. The current constellation of client demand, with buying power migrating down to functional leaders and a focus on technical expertise, is setting the course for where both the consulting market growth and consultancy investment priorities are pointing.
Notable 2024 Consulting Investments
Investments by consultancies broadly align with one of two strategies. One is market penetration: extending the footprint by bolting on new functional, geographic, and industry domains. These strategies involving extending an existing role to new clients, always have been and always will be part of the consulting landscape. The other strategy puts the consulting business model in play. It involves acquiring new capabilities to perform different roles for clients with the endgame being both a broader and deeper, more intensive engagement with clients.
Business model investment strategies ultimately revolve around acquiring the capabilities to create real-world outcomes for clients. Experience and Business Building outcomes have become less prominent areas for investment, both because clients broadly are less focused on Growth and consultancies have already bulked up substantially in these areas. Investments targeted at clients’ Optimize agenda, on the other hand, are evolving as outcomes increasingly entail combining traditional Performance Improvement domain expertise with more tech-driven Process Automation, especially involving AI. Accenture’s acquisition of Germany-based Camelot is a good example of this.
The standout this year, however, are investments in engineering disciplines that require deep technical expertise to create innovation outcomes for clients. This is different than the old growth play masquerading as innovation. It is about fundamentally changing the client value chain and the operations technology that powers it.
We see two important implications. One is that consultancies will increasingly encounter the professional services arms of engineering companies and will need to grapple with the brand implications. The other is that the unfortunate reality of investing in new roles is that earning a return is not automatic. Our analysis of thousands of investments made over the past decade reveals essentially zero correlation between the volume of investments a consultancy makes in a capability and the extent to which clients view them as differentiated in it. Capitalizing on growth opportunities requires both the right combination of consulting roles and the go-to-market system to “get the power to the road.”
If you’re interested in learning more about our perspectives in the context of your own strategy and discussing the latest consulting industry intelligence that Kennedy Intelligence is monitoring and analyzing with our team, please get in touch.
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. The views and opinions expressed in this article 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.
