This post was originally published on Environment Analyst. To see original article please view link below:
https://environment-analyst.com/mis/100855/industry-responds-to-covid-19-crisis
Health & safety of employees, clients and society at large prioritised as consulting sector prepares for challenging times
In light of the unprecedented and rapidly changing operating environment, consultancies are having to work up plans to deal with the coronavirus (COVID-19) outbreak to protect their staff, clients and stakeholder communities as well as to ensure business resilience as the global economy veers towards recession.
As the industry attempts to assimilate the ramifications of the escalating crisis, a number of common issues will be at the forefront of the minds of business leaders in the sector. Consultancy firms are first and foremost a people-based businesses and any downturn in the economy is certain to result in redundancies, as seen in the wake of the global financial crisis ten years ago. Some SME practices are already saying they will not be able to survive more than a few weeks’ shutdown or remote working at reduced ultilisation given their cash flow situation.
Historic income patterns for consulting firms during prior downturns would suggest that the impact usually comes after a six-month time lag as firms work through their order book pipeline, before they become fully exposed to project delays, postponements and cancellations. In this current unique situation there question marks over the disruption to construction supply chains which could have a more immediate bearing, although environmental consultants tend to do most of their work at the front-end feasibility and planning stage as opposed to the build/operate stage.
A decade ago, when many of the firms in the sector were then the midst of responding to the worst recession they had ever experienced, the ability for teams to work on overseas projects or in countries that were not so deeply impacted provided a cushioning effect for many - but with the international travel restrictions and multi-jurisdictional nature of the COVID-19 crisis the prospects of being able to do so again seem extremely limited. The key questions are to what extent virtual working practices can take up the slack and how much firms are reliant on staff actually being on-site?
Certainly it is likely that some restrictions imposed during the previous economic dip - such as extended periods of unpaid leave/enforced sabbaticals and shorter working weeks, and inevitably job losses - will feature in the decision-making in coming months. Meanwhile, companies will also be watching to see what further tax breaks, preferential loans and funding grants will be available from the banks and governments to support them through this challenging period. We can also expect governments to plough investment towards national infrastructure projects as fiscal stimulus which will help mitigate the very likely downturn in private sector work for consultants.
There’s also the longer term impacts to consider - a virus triggered recession is expected to fundamentally change how we live, do business and invest, as affirmed by CEO of deVere Group, Nigel Green, one of the world’s largest financial advisory organisations. Green commented: "Any way you look at it, it’s now almost certain that there will be a coronavirus-triggered recession as both global supply and demand are impacted.
"We can expect this recession to be deep but short. The slowdown will be temporary because it’s not caused by deep-rooted problems and imbalances in the economy, rather by a wholly unexpected shock that’s gripped the world."
"Every recession produces a new world. This one will too," he continued. One major outcome is that the pandemic is expected to speed up the technological revolution and the infiltration of AI and mobile supercomputing.
"New industries will emerge and, of course, there will be winners and losers. This will mean job losses in some sectors and huge, possibly unprecedented, job and investment opportunities in others," said Green.