As we get ever closer to the launch of the 2014 Vault Consulting Rankings—coming on August 20th—I've taken the opportunity to dive a little deeper into some of the data from the thousands of consultants who took our Consulting Survey in spring this year. While the qualitative data we glean from the surveys tells the story of what it's like to work for a specific firm—giving our audience an insider's perspective on life at these firms—there are also some great insights to take from the quantitative data, especially when considering the industry as a whole.
One of the data points I've been particularly interested in this year is industry outlook, and what it may portend for the future of the economy. After all, with economic activity depending in large part on the willingness of major corporations to ramp up hiring and seek new opportunities to generate revenue, who better to give us a window into their thoughts than the legions of consultants who advise and service them?
To gauge outlook in the industry, we use a fairly simple metric: we ask consultants to rate how positive they are in relation to their firm's overall outlook in the coming year, on a scale of 1 to 10 (where 10 is the most positive result). We can then look at those results across the industry as a whole, or divide them by firm—which is how we calculate our outlook ranking—or the practice area of the various respondents. This latter technique is potentially instructive when it comes to the question of assessing the overall health of specific business sectors and lines of business within firms—a crucial consideration for aspiring careerists (you probably don’t want to commit yourself to a career in a declining field) as well as for figuring out where the opportunities may lie in the economy as a whole.
So without further ado: here's how consultants have answered the outlook question over the past couple of years, sorted by practice area:
* Denotes a practice area that is new to the survey this year.
It's probably best not to try to read too much into any one data point here: while it's certainly possible to theorize from the slight downtick in sentiment that consultants are feeling less positive than they were last year, a couple of factors may be at play. First, as I noted in an earlier post, the most positive of all groups of consultants are those in the government services/public sector—a fact that may seem odd, given the focus on the sequester this year (the implications of which were being openly discussed in the media while our survey was open for consultants to take), and the generally positive economic news in most other sectors. However, as I wrote in that previous post, consultants operate in an environment where uncertainty is an ally: companies are more likely to require specialist help when the future is uncertain, rather than when everything is going well and we're operating in a "normal" business environment. Hence, consulting firms may well benefit—at least in the short term—from the drawdown in government spending, by helping government agencies figure out ways to cut costs without affecting their ability to perform their core functions.
That same rationale may well be at play when considering the drops in outlook, too. After a five-year period in which companies have been forced to deal with a huge economic crisis, cutbacks and cost control measures (often recommended and implemented by consulting firms) have seen corporate profits and cash reserves reach record highs. With most of those cuts now realized, but the economy still in tentative growth mode rather than at full-speed, it wouldn't be a huge surprise if the need for consulting services in some sectors had tapered off a little. That would certainly explain why some of the biggest drop-offs in outlook are in management, strategy and operations consulting—and why HR is one of the least-changed of all the sectors.
It's also possible that consultants last year were simply exuberant at the upswing in the business cycle, and that that exuberance has died down a little as the prospect of having actual work to do has become the day-to-day reality. Anecdotal evidence certainly supports that: comments from consultants complaining about their firms being stretched and having too much work for too few consultants have been a common theme in the qualitative data this year. Which, in the larger scheme of things, is exactly the kind of problem that we should be happy to see emerging in any industry. Keep your fingers crossed for more complaints next year!
To gather the results for our survey, we distributed it to over 150 consulting firms, and received responses from more than 5,000 practicing consultants in North America. The Vault Consulting 50, Diversity, Practice Area and Best to Work For rankings—all of which are based on those responses, will be released on August 20.
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