Independent Consultant Survey Results – Part 2: The Consulting Marketplace
Editors Note: This is the second in a series of four articles presenting highlights from the 2009 M Squared Consulting independent consultant survey. You can read the first article here. A PDF copy of the full report is available for download.
Consulting Revenues
In this year’s survey, when comparing 2008 with 2007, as many consultants reported a decrease in revenue (36%) as those reporting an increase in revenue (37%). In a sure sign of the recession’s impact, these results are in marked contrast to prior surveys where the answers skewed heavily towards substantially increased revenues.
Survey highlights - Percentage of consultants whose revenue increased year over year:
- Prior surveys: 55%
- Current survey: 37%
Note: prior surveys are defined as the average of the 2005 and 2006 surveys.
“Revenue is down about 20% beginning in December, particularly for the Organization Development work I do. Although I am not approaching it differently, the new projects seem to be smaller in scope and more time limited.” - M Squared Consultant
Revenue Forecast
Consultants are forecasting a decline in their business revenue in 2009; 24% indicated a slight decline and 22% a major decline. These results are in stark contrast to the previous surveys where nearly 75% of consultants predicted an increase in revenue in the coming year.
Survey highlights - Percentage of consultants forecasting a decrease in business in 2009:
- Prior surveys: 6%
- Current survey: 46%
“I think that there will be a general decline in business with a few spikes from current clients, but overall, a down year…” - M Squared Consultant
Industry Opportunity
The industry verticals where consultants see the most opportunity for their services remains consistent with previous years, including technology (46%), healthcare (42%), biotechnology/life sciences (31%), and financial services (27%). Of note are an increase in internet services and a decrease in manufacturing.
Note: Technology was defined as computers, peripherals & software, internet services, and networking/wireless
A couple of interesting write-in comments from M Squared consultants:
“Green and Clean Technology.”
“Internet infrastructure. Financial analysis systems. Forecasting and modeling systems.”
Client Trends
“I am only working with clients that are about seizing the opportunity for growing in a down economy. The companies that invest in growth now will be the dominant players in the long term…Survival will belong to the companies that promote and invest in growth.” - M Squared Consultant
The top trends Independent Consultants are seeing is that clients are taking much longer to make decisions, but most are moving ahead cautiously with new initiatives. 30% have frozen consulting budgets, while 19% have frozen fulltime hiring but are still actively using consultants. In comparison to prior years, far fewer clients are starting new projects and the overall business sentiment of clients is negative.
Survey highlights - Top client trends in 2009:
- Are taking longer to decide about new projects: 54%
- Appear to be moving forward cautiously on some new initiatives: 53%
- Are not making investments in new initiatives: 31%
“[Clients] are very nervous about spending… Clear communication, differentiation, credibility, customer benefits, and especially bottom line benefits are more important than ever.” - M Squared Consultant
Client Challenges
It is no surprise that cost control was the most common answer (55%) for top business challenges clients will be facing in 2009, followed by gaining operational efficiency (34%), and revenue growth opportunities (32%). In previous surveys, these ranked behind more strategic issues.
Survey highlights - Top business challenges clients will be facing in 2009:
- Cost control: 55%
- Operational efficiency: 34%
- Revenue growth: 32%
“[Clients are] Looking for cost reductions, process streamlining, and incremental revenue.”
“All my clients are very cautious about spending of any kind.”
“In my consulting business- in the area of consulting on revenue generation- work is expanding.”
