What does labor displacement mean for management consulting firms?
ISSN: 2040-8269
Article publication date: 7 December 2020
Issue publication date: 7 May 2021
Abstract
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.
Keywords
Acknowledgements
The author would also like to thank two anonymous reviewers, the editor as well as the CERNA, MinesParistech team for the continuous feedback across the diverse stages of this study. Note that the ideas and opinions developed in this paper are those of the author and do not engage any company nor institutions.
Citation
Ribes, E. (2021), "What does labor displacement mean for management consulting firms?", Management Research Review, Vol. 44 No. 5, pp. 806-822. https://doi.org/10.1108/MRR-03-2020-0120
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited