Freelance Management Consulting: Back To Growth

Source: Forbes
Jon Younger

According to recent reports, US management consulting exceeded 320 billion dollars in 2022. Global revenues are estimated at 900 billion. Most expect the industry to cross the trillion-dollar line before 2026.

Consulting is in the early days of a massive technology and talent-led transformation. As a CEO participating in this panel survey predicted: “AI will replace management consultants with management consultants that know how to use AI!”

The industry is also adapting to the growth of freelance management consulting marketplaces. A recent review described the freelance challenge: “… Crowdsourced consulting firms let clients hire piecemeal from niche firms or freelancers that quickly turn around necessary products and services to them with little to no overhead. Crowdsourcing beats large firms on price, turnaround time, and, often, quality.”

Some of these consulting marketplaces are small and niche; others like Catalant are large and operate globally. Independent management consultants work for SMB and enterprise corporates, asset managers, PE and VC firms, and augment the resources of large consulting firms; after all, many are alumni.

A survey by Movemeon found growing interest among experienced consultants in the freelance track. Significantly more professionals in 2023 sought freelance consulting work than the same period last year.
It’s a propitious time to ask CEOs of leading independent management consulting marketplaces to share their forecasts of the channel. Here’s what they told us:

Nick Patterson, CEO Movemeon (UK) “We’ve seen two recent shifts: the rapid growth of platforms to source work, and more consultants in marketplaces. Consultants now find a quarter of all projects on online platforms. Its the second most common way after referrals. An influx of consulting talent, economic uncertainty, and a tight talent market are driving growth. We’ve seen 38% growth in projects in the first quarter of 2023, as companies bypass hiring freezes and drive transformations. There has also been a dramatic shift in client mix: consultancies accounted for the majority of our projects in 2021-22, now replaced by large corporates and PE-backed businesses.”

Leslie Garçon, CEO, Weem (France) “Our clients need help in large programs of change management and with strategic projects. Clients value independent consultants who know how to have a strategic view and are operationally involved with internal teams e.g, we recently provided 10 consultants for a global project to change a company’s financial management. Our client mix is stable: We work with large companies, startups, and investment funds. Clients increasingly ask for specific profiles – expertise, sectors, and language skills – to complement the skills of internal team members. Constantly updated data on individual professionals is therefore more essential than ever in curation. Large companies are issuing tender calls to select future business partners and scaling their collaboration with independents. 2023 is a year of stabilization and structuring. 2024 will be the year of increased demand.”

Yasmin Kumi, CEO Africa Foresight Group (Ghana) “Client budgets are tight because of the slow economy, but uncertainty gives rise to more demand for external advice. This makes independent consultants more attractive: They are more budget-friendly and flexible. Our client book has shifted strongly towards SMEs that require assistance with reorienting their strategy and structure. Independent consulting, during this economic time, might end up becoming the resilience catalyst for small and medium sized businesses.”

Charly Gaillard, CEO Beager (France) “The beginning of 2023 was stable compared to 2022, which is changed from years of growth. Decisions were taking longer, mostly due to geopolitics and uncertainty on first semester budgets. We now see a strong rise in demand for the last few weeks and are confident this will go on. We are confident for both this year and next. Our client mix is stable. We see a lot of new industries interested in independent management consulting, with currently a lot of transformation projects happening, especially as companies focus on support and core systems digitalisation.”

Pat Petitti, CEO Catalant (US) “We see large enterprises thinking more strategically about how independent consultants fit in their workforce plans. They find the big consultancies, while excellent at big picture strategy, ill-equipped to help with more targeted opportunities that require deep subject matter expertise. In a cost-conscious environment the work tends to be more execution and short-term ROI focused, and that’s where independent consulting platforms can add tremendous value. As a result, we’re already seeing companies contemplate how to change their planning process to incorporate greater use of independent consultants. For companies already in planning, we see them setting aside budget specifically for independent consultant work.”

Joeri Schouten, CEO Sweav (The Netherlands) “The market continues to grow and mature despite economic headwinds. The project mix has shifted from growth to more optimization focused initiatives, especially among PE owned portfolio companies acquired 1-4 years ago at high valuations. Value creation initiatives are under pressure to succeed and they need freelance talent to do so. On the freelancer side, we expect an influx of ex consultants who are now in chief of staff like roles at overfunded start-ups. As funding tightens, so does growth. These people will get bored with their jobs and go freelance to seek more excitement.”

Sandeep Dhillon, CEO Talmix (UK) “The top demand driver for independent consultants in our network is digital transformation. Close behind are two big workforce trends: “the great resignation” and enforced layoffs. Companies don’t want to rebuild in the traditional way and want more of the flexibility and expertise that Talmix was created to provide. There is a particular increase in fractional and interim roles, particularly finance and strategy. We also see more females considering interim than previously. We see independent talent increasingly welcomed in APAC as in other regions such as the Mideast where our consultants are supporting projects and also upskilling local talent. Looking forward, the biggest development for us is the increasing adoption of independent consultants by large global enterprise companies.”

Vikram Ashok, CEO Graphite (US) “We’re optimistic about the future of independent management consulting and expect meaningful growth over the next 18 months. Economic uncertainty, budget cuts, and hiring freezes, are driving Fortune 500 companies for a more flexible model to get strategic work done, and independent management consulting is proving a natural solution. Organizations are spending on change management, organization design, and operational optimization, and solving their most critical challenges with independent management consultants.”

Victor Hoong, CEO Splash (The Netherlands) “We’re seeing exciting trends on the Splash platform, with a recent surge in demand for AI and automation consulting services, alongside a growing emphasis on sustainability and ESG consulting. We think these areas will continue to expand in the coming year, adding to the sustained request for consulting support in digital transformation. We’re looking forwards to Splash playing a crucial role in 2023-24 helping consultancies access the independent talent they need to deliver value for their clients.”

Nikolaus Schmidt, CEO Klaiton (Austria/DACH) “We are experiencing a clearly positive development in independent management consulting overall. Our large and medium sized clients have two strong needs: sustainability & ESG consulting within core and support processes, and the rise of bundled interim-consulting mandates. The reason for the latter is well known in the DACH market: We have a severe shortage of highly qualified personnel. Companies that do not fill these gaps will have issues delivering services and goods.”

Arnaud Sourisseau, CEO Onemansupport (France/Spain) “At OMS, we see growth in freelancing, and more talent interest in freelance management consulting in recent years. Freelancing attracts many new profiles and varying levels of seniority, skill, and aspiration. This diversity and growth of talent, in a context of economic uncertainty that encourages companies to slow down their fulltime recruiting, offers a promising forecast for independent management consulting. As companies slow down external growth projects, they are seeking our support on internal transformation projects, looking for agile and integrated alternatives, in complementarity with traditional consulting firms.”

David Küpper and Christian Moldenhauer Co-CEOs, Expertpowerhouse (Germany) “At Expertpowerhouse, we see continuing growth and expect it to accelerate later in 2023 and 2024. It’s the improving overall economic outlook. This allows many companies to focus on growth versus cost cutting. Strategic initiatives will be taken up and prioritized again, for example, supply chain initiatives that increase resilience. Also, AI will replace management consultants with management consultants that know how to use AI! Today 5% of German companies use AI in recruiting. Germans are cautious regarding data, yet we see more companies experimenting with use cases in recruiting and HR. Staffing of freelance management consultants is certainly one and we expect matching times further decreasing.”

Robert Burke, CEO SOBO (US) “Fractional consulting is the name of the game in 2023 and beyond. Growing businesses require strategic and tactical support from the outside to level up, as their traditional FTE talent isn’t cutting it. Our two-year forecast is a significant increase in fractional consulting engagements across the board, in all business areas e.g., HR, Sales, Marketing, Operations, Finance, and Technology.”

Jan Schächtele, Co-founder Malt/Comatch (Germany) “We see an increasing awareness of consulting marketplaces. Due to cost pressure, clients opt more often for well-designed teams of independent consultants instead of hiring costly consulting firms, which will lead to more consultants choosing freelance employment in the future, as we found in a recent study. Not only specialized experts profit from this. From cyber-security, to digital transformation or interim management, no project request is too niche.”

Viva la revolution!