The global consulting industry is expected to see revenues decrease by $28 billion due to the Coronavirus, with energy consulting and businesses services consulting most drastically affected.
- Experts predict that the global consulting market will see a revenue decrease of $28 billion due to the Coronavirus.
- This is a contraction of 18% from the market size in 2019.
- As such, the global consulting market in 2020 will be worth US$132 billion.
- This is an improved forecast from the original expected impact, published in March, of the Coronavirus on the consulting market, which predicted a 19% drop. However, the initial forecast was revised after European countries fared better than expected.
- Europe is still expected to have the largest regional decline in market size for the consulting market, with a decline of 22%, followed by Latin America with a decline of 20%, the Middle East with a decline of 19%, North America with a decline of 18%, Africa with a decline of 16%, and the Asica Pacific, with a decline of 12%.
Reasons for Decline
- Many businesses will put optional projects on hold until the Coronavirus’s full impact is clear, which means that many businesses are pausing or canceling consulting services.
- Some consultants report one-half to two-thirds of their work being paused due to the virus.
- Consulting firms are being impacted by the collapse of the global travel industry and international travel bans, as consultants generally travel internationally to serve clients. This means that many consulting agencies have had to shift to remote, virtual services.
- The impact of the Coronavirus on the consulting market in Europe is not expected to be as bad as previously predicted due to European government’s swift interventions, overall, including drastic lock down measures and substantial economic support, which seems to have stemmed the spread of the virus.
- The outlook for the consulting marketing in North America, on the other hand, is worsening, due to the increase in Coronavirus cases in the US, while the outlook for the industry in Asia Pacific region is fairly positive, with expected return to normalcy soon, thanks to the “stringent response to the outbreak in countries like South Korea and China.”
Practice Areas Seeing the Largest Declines
- Consulting for the energy and resources sector and business services are expected to see the most drastic declines due to the Coronavirus, with experts predicting 30% declines for both sectors.
- The energy sector is expected to see the greatest decline due to the decrease in demand for fossil fuels during the Coronavirus pandemic, as travel is all but completely halted and transport has seen a sharp decline. This decline in fossil fuel demand has energy companies tightening their budgets and maintaining only necessary spending.
- The decline in business consulting is due to the worldwide halt of M&A activity in response to the Coronavirus. Experts state that in the first three months of 2020, M&A activity worldwide had decreased 33%.
- Manufacturing consulting is expected to experience a 23% decline, due to “the closing of most non-essential factories amid the crisis.”
- Surprisingly, healthcare consulting is also expected to see a substantial decline of 21%, as healthcare companies turn more resources to dealing with the on-the-ground treatment of the pandemic instead of future planning.
Practice Areas Seeing Limited Decline
- Pharmaceutical consulting is only predicted to experience a 2% decline, as “demand for pharmaceuticals amid the largest public health crisis in a century will be high, meaning there will still be the funds available to invest in consulting projects for many clients.”
- Technology, media and telecoms consulting is predicted to experience only an 8% drop in revenues, likely due to the increased demand for technology solutions to conduct business, healthcare and social interactions during the Coronavirus pandemic.
- Financial services and public sector consulting are expected to see 13% and 14% declines in revenues due to the Coronavirus pandemic, respectively.