The consulting industry’s biggest players are being forced to rein in their ambitions and streamline operations as client spending slows amidst economic uncertainties.
Major firms like Accenture and Deloitte are taking measures to cut costs and recalibrate expectations after an era of rapid growth.
The signs are clear in the latest financial updates from these consulting titans:
- Accenture has lowered its revenue growth forecast for 2024, now expecting growth of 1-3% instead of the previously projected 2-5%.
- Accenture’s CEO cited clients continuing to cut back spending as the reason for the reduced forecast.
- Consulting revenues at Accenture fell around 3% in the latest quarter compared to 2023.
- Deloitte is undergoing “the biggest overhaul of its global operations in a decade” according to the Financial Times.
- It is reducing its business unit structure from five to four units to reduce complexity and costs.
- The goal is to “free up” more partners for client work instead of internal management, according to Deloitte’s global chief executive.
Despite the doom and gloom, one potential ray of light is the booming interest in generative artificial intelligence capabilities.
As companies race to understand and implement AI, many are turning to consultants.
McKinsey said it’s seeing significant revenue related to generative AI consulting, with demand for AI-driven productivity and workforce restructuring projects.
Accenture also reported that new bookings in generative AI brought in over $600 million in the most recent quarter and $1.1 billion through the first half of the fiscal year.
So while economic headwinds are forcing belt-tightening, the AI revolution creates new opportunities for consultancies to provide their wisdom – for those able to adapt quickly enough. An era of leaner spending may be on the horizon for these firms, unless white-hot AI demand proves a big enough exception.
But can AI revolution really make up for the current situation?
