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What does labor displacement mean for management consulting firms?

Author

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  • Edouard Ribes

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.

Suggested Citation

  • Edouard Ribes, 2020. "What does labor displacement mean for management consulting firms?," Management Research Review, Emerald Group Publishing Limited, vol. 44(5), pages 806-822, December.
    • Handle: RePEc:eme:mrrpps:mrr-03-2020-0120
    DOI: 10.1108/MRR-03-2020-0120
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