Consulting Services — industry outlook

• Period: 2026-09-28 to 2026-10-19
• Events: 2
• Generated: 2026-10-19T06:30:00.003Z

Revenue Trajectory and Growth Expectations

The industry outlook is bifurcated between short-term stabilization with cautious guidance and medium-to-long-term structural acceleration. Resources Connection (RGP) projects Q2 Fiscal 2027 revenue of $95 million to $100 million, broadly consistent with Q1, citing a market viewed as "stabilizing" and potentially "bottoming out." Conversely, CRA International (CRAI) forecasts aggregate revenue growth of 9%–10% per annum over the medium-to-long term for its core practices and wider portfolio. CRAI expects this growth to be driven by inbound new business growing at rates "significantly exceeding" current revenue growth, a trend management described as unprecedented in 37 years, whereas RGP notes that while pipeline activity is healthy, revenue conversion remains slower and less predictable due to extended approval cycles.

Macro Drivers: AI and Specialized Demand

AI is universally recognized as a primary demand driver, though the nature of the impact differs by firm. CRAI (CRAI) positions AI as a "demand amplifier" creating structural growth in energy infrastructure (data centers), life sciences (drug pricing/commercialization), and forensics (cyber incident response), noting that AI enables more efficient attacks which necessitates higher defense spend. RGP (RGP) also identifies AI as a key driver for long-term demand in technology, data, and business transformation but emphasizes that these needs do not immediately translate to project starts. RGP further highlights that client decision-making on discretionary projects remains cautious, with sales cycles lengthening and project start dates delayed by budget scrutiny, while CRAI notes its growth is counter-cyclical and driven by complex regulatory and litigation mandates rather than general consumer demand.

Commercial Performance: Pricing, Rates, and Utilization

Pricing power remains a distinct differentiator between the two firms. CRAI (CRAI) anticipates durable pricing power with rate increases implemented in 2026 expected to persist into 2027, supported by high barriers to entry and expert scarcity. RGP (RGP) maintains pricing discipline with modest bill rate growth (On-demand +4.1%, Consulting +2.2% YoY) despite volume declines. Utilization presents a key divergence in focus and current status. CRAI targets maintaining utilization in the high-70s to balance quality with growth. RGP identifies improving utilization, currently in the high 50s, as an immediate priority, warning that low utilization significantly impacts operating leverage and EBITDA margins due to the volatility of deploying people quickly.

Operational Strategy and Capital Allocation

Firms are adopting opposing strategies regarding capital deployment. RGP (RGP) is in a phase of operational simplification and cost alignment, expecting Q2 Fiscal 2027 non-run-rate/non-cash expenses of $2 million to $3 million and a run-rate SG&A of $40 million to $42 million to account for targeted reinvestments. CRAI (CRAI) is aggressively allocating 46% of total cash outlays toward talent investment to fund organic growth, aiming for headcount growth in the mid-single digits. CRAI also maintains a distinct capital allocation policy, targeting to return at least 50% of adjusted cash flow to shareholders (approx. 75% via buybacks, 25% via dividends) and plans to continue using forgivable loans for inorganic talent acquisitions. RGP ended Q1 with $61.2 million in cash, $24.1 million revolver capacity, and no outstanding debt, maintaining a quarterly dividend run-rate of $2.4 million.