The consulting industry and the crisis: what prospects for 2021?

• Bilan 2020 : The impact of the crisis in figures
• Outlook for 2021
• Overcoming the crisis

As a new year begins, the counters are not reset as many had dared to hope. The digital sector, like the rest of the world, has been affected by the economic and health crisis of 2020. The market for these companies must now face up to what has weakened it, and try to draw new strength from its failings for 2021.

For some, the consequences are more serious than for others, but the consequences are very real and must be taken into account if we are to make a firm start in January.

Bilan 2020 : The impact of the crisis in figures

1. The digital sector less affected than expected

At the beginning of December 2020, Syntec Numérique, the French trade union and professional organization for digital players, shared the results of its second half-yearly conference of the year. Contrary to what we might have thought given the complicated situation in the first half of the year, we can see that the digital sector is suffering less of an impact than expected.

The decline in sales, initially forecast at -6.7%, finally came in at -4.6%, 2.1 points higher than expected. What might be considered a relief is not true for all the sector's businesses. Indeed, software publishers saw relatively high growth compared to other businesses: a +0.3% increase in sales, compared to -4.2% for IT Services , for example.

According to Syntec Conseil, over the year as a whole, there appears to have been an 11% drop in activity and a 2% fall in headcount.

2. Technology consulting: the hardest-hit sector

As far as consulting firms are concerned, the figures from Syntec Numérique and Syntec Conseil are not exactly in unison, but both agree on a substantial decline in activity: -5% and -11% respectively. Technology consulting was the hardest hit by the crisis, with a significant drop of -12.3%.

To rub salt into the wound, ICTs are in dire straits on the job market, with over 10,000 positions at risk, unlike the rest of the sector. According to Syntec Numérique, around 2 out of 3 companies claim to have increased their workforce by 2020.

What does this mean for the year ahead, given that in 2019, technology consulting grew by +5%? Consider the popular expression: " One step forward, two steps back"; if this becomes the new trend for ICT, should we start sounding the alarm?

3. A rebound in growth, limited by sector

The curve looks set to rise again in 2021, and a rebound in growth is to be expected, but will remain limited. If we continue with our analogy: "Let's just put one foot in front of the other". Software publishers will continue their momentum and bounce back with growth of +3.8%, while IT Services will see growth of +1.1%, which remains positive if we compare it with ICTs, which will take longer to recover and will once again suffer a decline (-3.3%) at a lower "cost" than 2020, it seems, according to these figures.

Syntec Numérique predicts a +1% increase for the digital sector as a whole.

" This rebound remains limited, however, and conditional on customers' economic situation: renegotiating supplier contracts (and therefore putting pressure on prices) will be the second IT priority for 60% of digital business customers, who have already launched or will launch projects along these lines in 2021." Syntec Numérique

Outlook for 2021

1. Facing the challenges

In addition to the downturn in business and a drop in sales, one of the many ways in which the consulting industry has been affected in recent months is reflected in the recruitment process, which has changed radically.

Normally, recruitment agencies flock to young graduates of the grandes écoles, but this spring this craze was quickly cut short. Le Monde has taken an interest in this issue, and in an article tells us that the vast majority of interviews with graduates of grandes écoles are unsuccessful, forcing these future juniors to draw a line under an open-ended contract on leaving school, and fall back on an internship while waiting for the job market, impacted by the Covid-19 crisis, to evolve positively.

This recruitment phase was unusually short for the Big Four, as it was for other consultancies and auditing firms, such as Kéa in the Paris region, which hired 40% less, resulting in strong competition.

This slowdown in recruitment did not augur well for the year ahead, but a change of outlook for 2021 was essential if we were to keep moving forward. Take the example of the Middle East, which has shown resilience , according to this article on Consultancy-me.com: Crisis management differs from country to country, but the Middle East has taken a major step forward before the end of 2020 by planning to recruit new consultants in the coming months, despite the threatening prospect that the consulting market could " lose up to a fifth of its value - or $600 million " (in the Middle East).

According to a Bayt and YouGov survey, 58% of respondents in the Middle East planned to recruit consultants in December 2020, and 81% plan to do so in 2021. This puts them at the top of the list " in terms of hiring intention ". Other countries are also gradually picking up the pace.

What has helped us bounce back is the organizational change linked to adapting to digital work. Indeed, the consulting industry worldwide has taken up this new challenge: the acceleration of digitalization, which is essential today to manage internal activities and digital projects.

2. New trends and digital transformation

The crisis has led to new emerging trends, with technology and digital technology playing a major role in the consulting sector, enabling broader coordination with teams around the world. This also facilitates the process of understanding customer needs through the use of virtual platforms.

According to this blog post: " Technology-related businesses are booming and will increasingly rely on consulting to exploit the current favorable conditions. This may strengthen demand for strategy and operations-related mandates for consulting firms".

3. Preserving expertise

Digital acceleration - or Consulting 4.0 - and thenewapproach to remote working have changed the game. 2021 is a very demanding year for consultants in terms of more specialized skills and knowledge. Companies' demand for more personalized, in-depth solutions tailored to their business since the onset of the crisis has strongly encouraged the consulting industry to prioritize broader contribution commitments and long-term strategies. This, in turn, has emphasized the role of experts who can stand out from the crowd thanks to their diverse skills in a variety of sectors.

Increasingly, recruitment targets candidates who are experts in a particular field - in this case,sector expertise.

Overcoming the crisis

1. Invest in IT

Godefroy de Bentzmann, President of Syntec Numérique, asserts that " the digital market is holding up better than the average sector in France, as it is stimulated by the digital transformation of organizations ". This speaks volumes about the importance of investing in technology to overcome the crisis and ensure business continuity through improved virtual platforms and digitized processes.

"The pandemic will continue to shape business strategies in 2021, and consumers will expect faster, more reliable and safer user experiences. TMT companies that can meet these customer needs, while rebuilding their industries for growth, will likely become leaders next year and beyond." Kevin Westcott, Deloitte's US TMT Leader.

2. A wave of optimism on the horizon

More than in the past, the crisis has encouraged many consultants to go independent. Several CEOs of independent management consulting platforms have expressed the view that independent consulting, in particular, will see strong growth in 2021, as consulting companies are already on the right track.

In the U.S., Rob Biederman (Catalant), says he has seen " the average size of (their) projects increase by 30% year-on-year ". In France, Martin Videlaine (NC Partners) expects to see "the growing functionality of fully digitized platforms" and the blurring of boundaries between traditional management consultancies and platforms, leading to further mergers and strong growth.

The consulting sector as a whole is anticipating restructuring work with their companies and an acceleration in their activity, thanks in particular to the considerable expertise of independent consultants, the optimization of virtual platforms and, of course, the adaptability and resilience demonstrated by consulting companies in all fields, around the world.

Read this article on how IT Services faces up to the crisis in 2021.

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