Offering a specialist consulting service can hinder short-term growth at consulting firms throughout the UK, but providing specialist expertise remains crucial to their long-term competitive advantage, according to new research published today.

In a report entitled ‘The Consultancy Conundrum: growth and the double-edged sword of specialist talent’, Sonovate, the leading provider of embedded finance and payment solutions for the contingent workforce, explores the opportunities and challenges facing UK consultancies to boost business growth and unlock long term competitive advantage.

The report examines independent research commissioned by Sonovate among a cross-section of UK consultancies of all sizes, locations, disciplines and industries. The research found that 85% of small consultancies surveyed (those with 10 to 49 people) and 55% of medium-sized firms (those with 50 to 249 people) say that being specialised reduces their scope to expand their client base through new business wins, with this issue compounded by the challenges of finding the specialist talent to serve any new clients they were to win.

85% of small consultancies and 82% of medium-sized consultancies say they have enough good talent in their teams to continue serving their clients well, but would need to hire more consultants to expand their businesses. Over half (55%) of medium-sized consultancies say they have lost out on contracts specifically because they do not have the capacity to take on more work.

Finding specialists to join consultancies is, the research confirms, a huge challenge. 57% of all consultancies say that there is a shortage of highly skilled, experienced consultants and they struggle to find and retain enough of them. This rises to 77% among medium-sized consultancies alone.

The research goes on to explore whether the specialist model is appropriate for all firms, and the potential benefit to firms of loosening their focus on a specialism to hire more freely and subsequently win more work and boost turnover. However, the idea of becoming more generalist than specialist is not a prospect for many as it is seen as a challenge to long-term success. 85% of small consultancies and 77% of medium-sized counterparts believe being specialist gives them a competitive advantage over generalist competitors - something which would contribute to the firm’s long-term chances of survival.

Commenting on the research, Damon Chapple, Co-Founder & Co-CEO of Sonovate, says: “Sonovate’s research definitively shows that specialist talent remains crucial to consultancies’ long-term competitive advantage. Yet, it’s intriguing how the data also reveals how focusing on a specialism can also impede business growth in the shorter term, particularly because hiring specialist talent is crucial.

“Sourcing, securing and holding onto specialist talent is a double-edged sword. Without it, a firm will fail to maintain a competitive advantage over the long-term, but acquiring it takes resource, effort and time that smaller-scale consultancies can often ill afford to waste. A specialism, however taxing it makes a business’s growth strategy, is key to commercial success over rivals. Learning to navigate this complexity is paramount.”