Coronavirus Causes Losses for the Management Consulting Industry in Bahrain and Worldwide

We, as owners of management consulting firms, are as damaged as other businesses such as salons and restaurants. Our clients tend to delay projects, reduce their scope or even cancel them entirely, which leads to financial losses that are hard for us to bear. Especially, as those familiar with this industry know, it is difficult and fiercely competitive, and some of us cannot endure staying without income, so closing the business becomes the only outcome. In particular, the nature of this industry requires its practitioners to be fully committed with no fixed working hours, so you cannot be an employee elsewhere, and you therefore have no other income to rely on to meet your needs and your business needs.

Of course, we do not mean the giant consulting firms present in the country, which are holding firm because of their extraordinary relationships with government bodies and large and giant companies, from which they draw millions, indeed unbelievable sums. These firms are exempt from crisis accounting.

As for the giant consulting firms with a strong footprint and even deeply rooted client relationships, they too are seeing great damage. The economic slowdown expected as a result of the coronavirus indicates that hard years await these consulting firms.

The management consulting industry is expected to shrink very significantly worldwide, as coronavirus travel restrictions have affected it, since management consulting professionals spend nearly 80 percent of their working lives away from home.

These firms will work to secure their bottom lines by getting rid of discretionary spending, limiting hiring, reducing the use of external consultants, and even laying off a large segment of their permanent staff. This will reduce demand for consulting services and cause a drop in revenue for the global management consulting industry.

As a result of the coronavirus pandemic and the economic slowdown, consulting firms may follow a digital-centered approach and offer services at lower cost because so many expenses have been eliminated.

The main industry risk factors, with an almost certain probability of risk, are demand for management consulting and consulting billing rates. Demand for consulting services may fall because of cost cutting by client companies. In addition, consulting billing rates are expected to fall by 30 to 40 percent, with the rates of decline differing by type of service.

A high level of coronavirus impact is expected for traditional consulting firms, as clients have postponed or dropped many consulting projects and there are significant scope reductions in ongoing projects. This will have a negative impact on consulting firms' revenue. At the same time, the impact on independent consulting firms is moderate. Independent consulting firms may benefit from the situation as an opportunity, because they have low overheads and can therefore offer services at lower prices.

However, in our situation here in Bahrain, with a huge number of consulting firms in the local market, the truth is that few of them fit this description. This is because of the lack of proper controls for obtaining a license to practice this important activity, and also because these firms are not familiar with the nature of these sciences. Pardon me, this is my personal point of view, and it is not to belittle others. Also, very few appreciate this expertise and are ready to use the services offered, because the value of that expertise and the accepted methodologies is underestimated. So our impression is that we, as small and medium Bahraini consulting firms, are also on the verge of closing. At a time when we used to think a lot about accepting projects, today we do not capture projects of a value that keeps us afloat.

The client asks for a Bentley at the price of a Corolla. Regardless of this lofty phrase, he repeatedly insists on accommodating installment payments.

We submitted many proposals at prices 30 to 40% lower, and sometimes up to 50% lower than what we used to offer, yet we know the outcome as I mentioned above, and the main reason is that all the institutions and companies that need our services are already damaged and cannot commit to our fees, we the management consulting firms.

So where are we heading!