What does labor displacement mean for management consulting firms?

Edouard Ribes

Management Research Review, 2020, vol. 44, issue 5, 806-822

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: International business; Firm performance; Professional services; Offshoring; Firm strategy; Labor displacement (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:mrrpps:mrr-03-2020-0120

DOI: 10.1108/MRR-03-2020-0120

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