In recent times, the consulting industry has gone through many waves of change—from generalist to functional focus, from local to global structures and from tightly structured teams to remote experts. The same forces that disrupted so many other businesses like steel, publishing, etc. are starting to reshape the world of consulting.

This disruption has significant implications for firms and for their clients. How does the process of disruption occur?

• New competitors with new business models arrive
• Incumbents choose to ignore the new players or flee to higher-margin activities
• A disruptor whose product was once barely good enough achieves a level of quality acceptable to the broad middle of the market
• This scenario undermines the position of long-time leaders and often causes the “flip” to a new basis of competition

Opacity and agility have made consulting immune to disruption for over 100 years but these are rapidly eroding now in the current environment.

Many companies hire small armies of former consultants for internal strategy groups and management functions leading to increased sophistication in consulting services. Typically these people are demanding taskmasters who reduce the scope (and cost) of work they outsource to consultancies and adopt a more activist role in selecting and managing the resources assigned to their projects. They ensure moving more and more work in-house.

There is a shift in consulting industry’s competitive dynamics from the primacy of integrated solution shops, which are designed to conduct all aspects of the client engagement, to modular providers, which specialize in supplying one specific link in the value chain. The shift is generally triggered when customers realize that they are paying too much for features they don’t value and that they want greater speed, responsiveness, and control.

The following 4 scenarios are expected to occur due to this disruption:

1) A consolidation—a thinning of the ranks—will occur in the top tiers of the industry over time, strengthening some firms while toppling others.

2) Industry leaders and observers will track the battle for market share by watching the largest, most coveted clients, but the real story will begin with smaller clients—both those that are already served by existing consultancies and those that are new to the industry.

3) The traditional boundaries between professional services are blurring, and the new landscape will present novel opportunities.

4) The steady invasion of hard analytics and technology (big data) is a certainty in consulting, as it has been in so many other industries.

Some questions that consultants or consulting firms need to ask themselves are:

• Are you or your firm changing (at least) as rapidly as your most demanding clients?
• Are you viewing the advent of new competitors with a mixture of disdain, denial, and rationalization?
• Do you understand and accept the impermanence of your brands and reputations?
• Are you aware that the pace of change being managed by the traditional clients of consulting firms will continue to accelerate?

Disruption is inevitable. Although the pace or progress of the disruption cannot be forecast, it can be said with surety that whatever its pace, some incumbents will be caught by surprise!