Introduction to the Consulting Industry
Global consulting industry revenues (including HR, IT, strategy, operations management and business advisory services) will be about $345 billion in 2010, according to Plunkett Research estimates. This represents a rebound from about $310 billion in 2009 and $330 billion in 2008. In the U.S., accounting and related services (such as tax preparation), generated an additional $119.7 billion in 2009, down from $128.4 billion in 2008, according to the U.S. Bureau of the Census.

Consulting is a somewhat cyclical industry. After a decade of sizzling growth and enviable profits, the consulting business was forced to pull in its reins during 2001-2003. The stock market bust of 2000-2001, particularly in the technology and telecommunications sectors, caused this setback. Startup companies that were once lucrative consulting clients disappeared under crushing financial losses. Meanwhile, a general economic slowdown in most of the developed world further hampered the consulting industry.

Consultancies posted significant growth from 2005 through 2007. However, 2008-2009 marked a challenging period, in light of the global economic slowdown and shrinking corporate budgets. Government budgets have been under pressure as well, at the state and local level, where large deficits loom and tax revenues are down. Corporations, large and small, have been slashing spending, employment and capital investment in a sometimes desperate attempt to pay down debt while cutting costs. This has been particularly hard on some consulting sectors, since corporations and governmental agencies are prime clients for consultancies. In general, major consulting companies, including leading firms in management consulting and HR consulting, along with other advisories such as accounting firms, found themselves with substantial drops in business during 2009, in many cases 5% to 10%. Some companies cut their employee rosters and/or restrained hiring.

Consultants who focus on projects that might be nice to have but can reasonably be delayed found business to be extremely soft. For example, marketing projects, technology implementations, non-essential corporate reorganizations and such were delayed or cancelled by many potential clients. Consulting services that sound particularly non-bottom line focused, such as “change management” or “brand awareness” may not appeal to CEOs and CFOs until there is a major recovery.
India’s largest outsourced business and technology consulting firms were complaining that clients were delaying or cancelling projects as 2009 began.
However, as of late 2009 and early 2010, corporate profits in general had grown substantially, meaning that executives may be more willing to authorize new consulting projects as long as they see the potential for a good return on the cost...