Consulting firms cut forecasts, restructure amid slowing demand
NEW YORK, UNITED STATES — In a significant shift for the consulting industry, major firms are revising their financial forecasts downward and implementing cost-cutting measures as client demand for their services wanes.
This trend marks a challenging period for a sector that had previously seen robust growth, particularly during the pandemic when businesses sought their expertise to navigate unprecedented challenges.
Accenture, a leading professional services company, has notably reduced its revenue growth projection for 2024, based on its quarterly report. Initially expecting a growth rate of 2% to 5%, the firm has adjusted its forecast to a more modest 1% to 3%.
This adjustment follows a reported 3% decline in consulting revenue for the second fiscal quarter compared to the previous year.
In a report by The Financial Times, Accenture’s CEO, Julie Sweet, attributed this downturn to a tightening of client budgets, noting a visible reduction in spending as the new fiscal year began.
Similarly, Deloitte, another giant in the consulting world, embarked on a significant reorganization effort aimed at reducing operational costs.
This restructuring will see the firm’s main business units consolidated from five to four, a move designed to streamline operations and focus more resources on client-facing activities.
Deloitte’s global chief executive, Joe Ucuzoglu, communicated to partners that this overhaul aims to simplify the firm’s structure, enhancing the quality and value delivered to clients and the career opportunities available to employees.
The consulting industry’s slowdown is partly due to the end of the pandemic-driven demand surge, which left firms with excess capacity as macroeconomic conditions tightened.
Some companies, including Accenture, have resorted to offering stipends to new hires to delay their start dates, with amounts reaching up to $25,000.
Despite these challenges, the sector sees a silver lining in the burgeoning field of artificial intelligence (AI).
Both Accenture and McKinsey have reported significant revenue from projects related to generative AI, indicating a growing demand for expertise in this cutting-edge technology.
This trend suggests that while the consulting industry faces immediate headwinds, the evolution of technology could pave the way for new growth opportunities.
