What does labor displacement mean for management consulting firms?

Purpose This study aims to empirically investigate the effects of labor displacement on US management consulting (MC) firms. Design/methodology/approach This paper leverages standard linear regressions to identify and discuss correlations between progresses made in terms of labor displacement and the evolution of MC firms performance indicators. Findings In the context of US MC practices, the study shows that for every percent of work displaced, production costs are reduced by $3.7/h on average. It also highlights that as prices also go down by $3.3/h on average per percent of work displaced, off/near-shoring increases MC practices profitability. Displacing labor is yet a transformation that occurs mainly in very large firms (i.e. more than 1,000+ employees) and its full potential takes more than 4-5 years to realize. Originality/value This study provides new empirical benchmarks of the effect of labor displacement on MC firms. This study shows how long off/near-shoring takes to reach its full maturity.