It’s a good time to be a consultant, and a terrible time to become one

It is a bit gloomy out there.
It is a bit gloomy out there.
Image: Reuters/Ueslei Marcelino
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Covid-19 froze the US consulting industry. A deeply uncertain economy and travel restrictions have put the industry’s hiring on pause, making it an incredibly difficult time to be an aspiring consultant.

The jobs listings site Indeed says that in mid-September, postings for US-based consultant jobs are down 56%, compared to just 18% for jobs overall. Glassdoor, another jobs site, also shows consulting job posting down 45% in September compared to last year, compared to 14% overall.

There are three reasons for the lack of new jobs.

One, consulting companies didn’t let go of many people in the first place. While the overall number of people employed in the US declined by about 14% in April from January, jobs in “Management and technical consulting services” only fell by about 6%. As a result, there haven’t been as many jobs to fill during the recovery. In this respect, the consulting industry is similar to most professional services industries that rely on high-skilled labor.

The different hiring dynamics are primarily about how quickly the industry can match hiring to demand, Indeed economist AnnElizabeth Konkel explained to Quartz. Restaurants and retailers can quickly assess that their demand is rising or falling, and then hire or fire workers with speed. It doesn’t cost these companies a great deal to train new workers. In contrast, the future demand for consulting seems up in the air, so it’s difficult for consulting firms to know how much they staff they will need, Konkel said. Plus, training new consultants is expensive, so if a company is not sure they need them, it’s probably not worth making the hire.

The second reason that consultants aren’t hiring is that fewer of their workers are quitting. “[The] consulting industry has incredibly high churn rates,” said Stanford economist Nicholas Bloom, who was himself once a consultant with McKinsey. “During my time at McKinsey, consultants were leaving all the time to take jobs with clients or other firms, which required a massive amount of new hiring just to stand still.” This type of churn likely isn’t happening right now, thinks Bloom, since people are less inclined to the leave their job during a pandemic. Without people quitting, it’s less necessary to find new workers.

Although data on the rate of quitting in the consulting industry isn’t available, data for “professional and business services” show a huge drop in monthly quitting rates from April to June. Professional services jobs are typically higher turnover than the average job, but that gap narrowed during this recession.

A third possible reason for the lack of hiring is the consulting industry’s reliance on business travel. Many management consultants make weekly trips to other cities to work with staff on site, but Covid-19 has made this difficult-to-impossible. Companies may not want to hire consultants if they can’t meet them face-to-face, or they may not be able to charge them as much money.

It’s possible that Covid-19 could transform the industry, said Konkel. Companies might find that remote consulting works and business travel will no longer be necessary. This could have the effect of increasing demand for consultants, and lead to more hiring in the long run. But in the short term, as coronavirus surges in many countries in the world, the industry will continue to stay on hold.