Every company is undergoing transformation as the digital age sets in. Automation, analytics, business intelligence, digitalization, and big data have become buzzwords for identifying and solving problems, making corporates somewhat less dependent on professional services (PS) firms for their routine analytical requirements.
However, most of the corporates today are facing increasingly complex problems. The Hackett Group, an intellectual property-based strategic consultancy, reported about 40% of corporates agree that they lacked the competency to solve problems in executing digital transformation while 80% corporate leaders believed that digital transformation will change their company’s business model. Such requirements have given PS firms an opportunity to secure more complex work, expand the scope of their services, and provide innovative and comprehensive solutions to their clients.
Business models have also transformed alongside their scope of work. For example, Eden McCallum has developed a new consulting model that mixes traditional strategy consulting with freelancing. HourlyNerd is a platform that enables businesses to connect with freelance consultants (a first as the professional services worlds adopts the concept of the GIG economy).
Professional services firms are particularly revamping their offerings in three broad categories: digital strategy, data analytics, and adding niche offerings to their portfolio. PwC, BCG, McKinsey, Deloitte, and KPMG are leading the way in the acquisition of knowledge and expertise to provide a new range of services.
Recent M&A activity focused on data and analytics, digitalization, and innovation includes (but is not limited to):
Data and Analytics
As consulting and advisory services companies acquire new expertise or make technological advancements in-house, they are gradually changing the dimensions of competition in various professions such as IT, branding, analytics, and advertisement. For example, Head of Deloitte Digital, Andy Main, claims that the firm’s digital consultancy model is poised to take over the advertising world after the company recently acquired advertising agency Heat Industries.
Additionally, EY, KPMG, PwC, and McKinsey recently acquired various analytics and big data players to provide integrated data analytics technology solutions to clients, bringing them in direct competition with big IT players such as IBM, TCS, Microsoft, HCL, and Oracle. Various leaders of technology practice in the PS firms have agreed that they are facing competition from IT solution providers. For example, PwC claims that its technology consulting is as good as that of any technology service player as it focuses on transformational deals. PwC India’s leader for technology consulting, Debdas Sen, said that companies such as TCS are “giving us a big fight.” Akhilesh Tuteja, partner and IT practice head at KPMG, said “We approach all problems from a business perspective. Compared to an IT company, the advantage we have is that we are able to bring in comprehensive solutions. We can bring in accounting experts and finance planners as and when needed. IT companies will find that difficult.”
We expect that the future will bring further convergence between management consulting and IT consulting businesses. Rapid expansion of service offerings by Professional Services firms will soon change the face of competition for established players in various industries.