FTI Consulting, Inc. (FCN): 5 FORCES Analysis [Nov-2025 Updated]

You're trying to get a real read on FTI Consulting, Inc.'s (FCN) profitability heading into late 2025, and honestly, the competitive landscape is a mixed bag. We see high pressure from suppliers because their specialized talent commands premium rates-think top-tier economic consultants demanding a 35% premium-while rivalry is fierce against giants like Deloitte, evidenced by FCN's lower 7.20% net margin compared to peers. Plus, customers are pushing back, demanding clear ROI, and the threat from in-house teams and new AI platforms is definitely rising. Dive in below to see how these five forces stack up and what it means for their near-term strategy.

FTI Consulting, Inc. (FCN) - Porter's Five Forces: Bargaining power of suppliers

The bargaining power of suppliers for FTI Consulting, Inc. (FCN) is significantly concentrated in the market for highly specialized human capital, which is the firm's primary and most critical input. This concentration is amplified by the scarcity of expertise in niche, high-stakes areas that FTI Consulting serves.

Highly specialized human capital, their primary input, commands premium rates. For instance, principal consultants in specialized economic analysis, such as those at leading expert firms, command starting hourly rates of $\mathbf{\$675}$ per hour, with complex commercial litigation matters pushing fees up to $\mathbf{\$850}$ per hour in 2025. More broadly, top-tier expertise in financial services consulting can command realized bill rates upwards of $\mathbf{\$1,000}$ per hour.

The cost associated with acquiring this talent is substantial. Recruiting a specialized consultant costs FTI Consulting around $\mathbf{\$45,230}$, showing high acquisition costs. This figure reflects the intense competition for proven professionals.

The power of external technology providers is also increasing, particularly in areas critical to FTI Consulting's growth segments like data analytics and AI. The accelerating cost of deploying AI products is pressuring tech vendors, leading $\mathbf{52\%}$ of technology executives to plan new pricing models to mitigate rising cloud spend in 2025. This dynamic suggests that while FTI Consulting seeks efficiency, the underlying technology suppliers hold leverage due to the high cost and complexity of integrating or switching specialized AI/data platforms.

The reliance on external, specialized subcontractors for surge capacity or niche skills also gives those suppliers leverage. For example, specialized subcontractors, like cybersecurity experts, saw their rates increase by an average of $\mathbf{20\%}$ for new contracts in early 2025, reflecting a tightening market for on-demand, high-end skills. This is evidenced by independent consultants planning rate increases of up to $\mathbf{20\%}$ for new clients this year.

Here is a summary of the cost pressures from key supplier categories:

The power dynamic is further illustrated by the talent market itself:

• Entry Level Economic Consulting minimum salary floor is $\mathbf{\$86,000}$ annually.
• Average FTI Consulting salary across roles is $\mathbf{\$140,048}$ as of November 2025.
• Entry Level Strategic Communications roles have a maximum pay of $\mathbf{\$83,000}$.
• FTI Consulting's Q1 2025 revenue decline of $\mathbf{3.3\%}$ was partially offset by cost-saving measures.
• The firm is managing headcount, having executed layoffs of approximately $\mathbf{5\%}$ of its workforce.

Finance: draft 13-week cash view by Friday.

FTI Consulting, Inc. (FCN) - Porter's Five Forces: Bargaining power of customers

When you look at the power customers hold over FTI Consulting, Inc. (FCN), you see a dynamic where large, sophisticated buyers definitely have leverage. This isn't a market where FTI Consulting can dictate terms without a second thought; the nature of their client base and the broader market size keep the pressure on pricing and demonstrable value.

The quality of FTI Consulting, Inc.'s client roster is impressive, which paradoxically can give those top-tier clients more negotiating strength. As of December 31, 2023, FTI Consulting, Inc.'s client list included 83 out of the Fortune 100 companies. This concentration at the very top means that losing one or two major engagements could have a noticeable, near-term impact on the firm's financials. To be fair, the firm's total revenue for the full year 2024 was $3.699 billion, so a single Fortune 100 client represents a significant portion of that revenue base, giving them a seat at the table when negotiating rates or scope.

Clients are, by necessity in this high-stakes advisory space, highly price sensitive and demand clear, measurable return on investment (ROI). You see this reflected in the firm's historical reliance on, and focus on, success fees in certain segments, which directly ties compensation to achieving agreed-upon outcomes. While I don't have the exact top 10 client revenue percentage for fiscal year 2022, the sheer scale of the clients FTI Consulting, Inc. serves-like those top 83 Fortune 100 firms-means the expectation for value delivery is non-negotiable.

The competitive landscape itself amplifies buyer power. The global consulting and integration services market was valued at approximately $366.24 billion in 2023. That massive market size means customers have numerous alternatives for almost any service FTI Consulting, Inc. offers, from restructuring to economic consulting. Also, the trend of large corporations building out sophisticated in-house capabilities, especially in data analytics and legal support, means they are less reliant on external consultants for baseline work, reserving outside help for truly unique or crisis situations.

Here's a quick look at the scale FTI Consulting, Inc. operates within, which frames the customer's perspective:

The bargaining power is further evidenced by the nature of the work, which often involves high-stakes litigation or financial distress where the client is already under immense pressure. In these scenarios, the client is looking for a specific, often urgent, outcome, and they will shop around for the firm that can promise the best combination of expertise and cost-effectiveness for that specific problem. You can see the quarterly revenue fluctuations, like the 3.34% revenue decline year-over-year in Q1 2025, which suggests that the timing and volume of large client engagements are not entirely within FTI Consulting, Inc.'s control; client timing dictates spend.

The key levers customers use to exert power include:

• Demanding fixed-fee or capped-fee arrangements.
• Insisting on clear performance metrics before engagement.
• Leveraging competitive bids across the large market.
• Reducing scope when in-house teams mature.

Finance: draft 13-week cash view by Friday.

FTI Consulting, Inc. (FCN) - Porter's Five Forces: Competitive rivalry

You're looking at FTI Consulting, Inc.'s position against its biggest rivals, and the numbers show a clear battle for market share, especially when comparing profitability metrics head-to-head. The competitive rivalry in the expert advisory space is definitely high.

Competition is intense against diversified global firms like Deloitte and McKinsey & Company. To give you a sense of FTI Consulting's scale against these behemoths, FTI Consulting reported revenues of $3.70 billion for the fiscal year 2024 and employs over 8,100 people across 33 countries as of early 2025.

The margin comparison is stark. FTI Consulting, Inc.'s net income for the first quarter of 2025 was $61.8 million on revenues of $898.3 million, resulting in a calculated net margin of approximately 6.88%. This is materially lower than the benchmark figure you cited for a competitor like Gartner's 19.71% net margin. Even looking at the third quarter of 2025, FTI Consulting posted a net income of $82.8 million on revenues of $956.2 million, yielding a net margin of about 8.66%.

Rivalry is high due to market fragmentation and the need to constantly invest in niche expertise. This pressure is visible in segment performance; for instance, FTI Consulting's revenue declines in Q1 2025 in Economic Consulting (down 12.1% to $179.9 million from $204.5 million in the prior year quarter) show market share vulnerability when demand softens in specific areas.

The industry sees continuous M&A, with firms acquiring niche players to boost competitive scope. FTI Consulting, Inc. itself is actively managing its capital structure, announcing an additional $500.0 million share repurchase authorization on October 21, 2025, bringing the aggregate authorization since June 2, 2016, to $2.2 billion.

Here are some key financial figures for FTI Consulting, Inc. from recent periods:

The factors driving this high rivalry include:

• Revenue contraction in key segments like Economic Consulting.
• Need to constantly demonstrate superior niche expertise.
• Margin pressure relative to specialized peers.
• Aggressive capital deployment via share repurchases.

For example, the Q1 2025 revenue for Corporate Finance & Restructuring was $343.6 million, a decrease of 6.1% year-over-year.

Finance: draft 13-week cash view by Friday.

FTI Consulting, Inc. (FCN) - Porter's Five Forces: Threat of substitutes

You're looking at FTI Consulting, Inc. (FCN) and wondering where the next wave of competition is coming from, especially from non-traditional sources. The threat of substitutes is real, driven by internal corporate shifts and the explosion of on-demand expertise. It's not just about other consulting firms; it's about clients choosing to do the work themselves or hire cheaper, specialized talent elsewhere.

Clients can substitute FTI Consulting's services with internal corporate capabilities.

While FTI Consulting, Inc. (FCN) reported strong Q3 2025 results, with segments like Corporate Finance & Restructuring revenue up 18.6% year-over-year to $404.9 million, the underlying trend in the broader consulting industry suggests organizations are building out internal expertise, especially in areas like AI and data analytics, to reduce reliance on external spend. However, this internal build-up is often focused on general adoption, not the high-stakes, specialized needs FTI Consulting addresses, such as complex litigation or distressed situations. For instance, the need for deep specialization means that even firms investing heavily in AI integration still turn to consultants for guidance on how to use AI wisely. Still, the ability for large enterprises to scale internal teams for routine advisory work presents a constant, low-level substitution risk.

The rise of the freelance platform market, projected to exceed $400 billion by 2025, offers cheaper, on-demand experts.

The broader gig economy, which encompasses more than just platform-mediated transactions, is a significant substitute pool. The total global gig economy is projected to exceed more than $450 billion annually by 2025. While the dedicated freelance platforms market size for 2025 is estimated lower at figures like $7.65 billion or $8.39 billion, the sheer volume of independent, specialized professionals available for project-based work means clients can bypass traditional firms for specific, on-demand expertise. This trend is supported by the fact that 48% of Fortune 500 companies use freelance platforms to optimize costs.

The threat is most acute in areas where FTI Consulting, Inc. (FCN) might deploy generalist or project-based staff, as these experts can be sourced more flexibly and at a lower blended rate.

Traditional legal firms and investment banks provide overlapping services like litigation support and corporate finance advice.

The established professional services sector directly competes with FTI Consulting, Inc. (FCN)'s Forensic and Litigation Consulting (FLC) and Corporate Finance & Restructuring (CF&R) segments. The global Legal Services Market is valued at approximately $1.03 trillion in 2025, and the specialized Litigation Services segment alone is estimated at $150 billion in 2025. Furthermore, the M&A advisory work that feeds the CF&R segment is a core function of investment banks, where M&A advisory services account for about 38% of their revenues in 2025. Global investment banking fees reached $60.5 billion in H1 2025. FTI Consulting, Inc. (FCN)'s FLC segment revenue grew 15.4% year-over-year to $194.7 million in Q3 2025, indicating that while the market is large, FTI Consulting, Inc. (FCN) is successfully capturing a portion of this work, often where specialized consulting expertise is needed alongside legal or banking services.

Here's a quick look at the scale of these substitute markets:

Growth of the global AI consulting market (projected to grow at a 35.4% CAGR) provides automated, digital substitutes.

Digital substitutes, particularly those powered by Artificial Intelligence, are rapidly maturing. The AI Consulting Services Market is projected to grow at a CAGR of 35.8% from 2025 to 2033, with a market size of $22.27 billion in 2025. This growth signals that clients can procure automated or AI-augmented solutions for tasks that previously required human consultants in areas like data analysis, predictive modeling, and system integration. FTI Consulting, Inc. (FCN) management is actively leveraging AI in client services, such as large-scale investigations and regulatory compliance, which is a necessary response to this threat. The risk is that for less complex advisory needs, off-the-shelf AI tools or specialized AI implementation firms become a viable, cheaper substitute for FTI Consulting, Inc. (FCN)'s broader advisory engagements.

The key areas where digital substitution is most potent include:

• Automated data analysis and processing.
• AI-driven fraud detection and risk modeling.
• Digital transformation strategy implementation.
• Routine e-discovery and document review.

If onboarding takes 14+ days, churn risk rises as clients look to faster digital solutions.

Finance: draft 13-week cash view by Friday.

FTI Consulting, Inc. (FCN) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for FTI Consulting, Inc. remains moderated by substantial structural barriers in its core advisory segments, though specific areas are seeing pressure from agile, specialized players. Barriers are high in FTI Consulting's core segments, requiring a global footprint and deep regulatory expertise. To compete across its five main segments-Corporate Finance and Restructuring, Forensic and Litigation Consulting, Economic Consulting, Technology, and Strategic Communications-a firm needs established credibility with Fortune 100 companies, law firms, and governmental agencies. FTI Consulting itself maintains a significant international presence, reporting over 8,300 employees across 34 countries as of early 2025. Entering this space requires not just capital, but years spent building the necessary network of former CEOs, CFOs, and government agents that form the backbone of FTI Consulting's expert-driven model.

Still, the threat is rising from niche boutique firms specializing in emerging areas like ESG and AI ethics. These smaller players, often led by former partners from larger firms, are expanding rapidly to serve mid-market clients with more agile, cost-efficient services. The market dynamics are clearly shifting toward specialization, as evidenced by the growth in independent expertise. For instance, the number of full-time independent consultants grew by 6.5%, reaching 27.7 million in 2024.

Significant initial capital is required to build the necessary reputation and expert network, which acts as a major deterrent. Consider the scale FTI Consulting operates at; they reported record third quarter 2025 revenues of $956.2 million and full-year 2024 revenues of $3.70 billion. Building a brand that can command such revenue streams takes time and massive investment in human capital and infrastructure.

Here's a quick look at the scale FTI Consulting operates within, which new entrants must match or circumvent:

New entrants include AI-driven expert platforms, lowering the barrier for certain advisory tasks. The integration of AI into consulting delivery is accelerating, with the MCA forecasting that 66% of consulting firms will significantly invest in AI-related services in 2025. While FTI Consulting has its own AI Managed Services practice, platforms that automate routine analysis or provide instant data synthesis can bypass the need for a large, expensive junior workforce for specific, data-heavy engagements. The broader AI consulting market is projected to reach $64.3 billion by 2028, indicating where new technology-first entrants are focusing their efforts.

FTI Consulting's workforce reduction of 2.7% to 6,457 professionals (Q3 2025) suggests a shifting demand profile that new entrants can target. This adjustment, which followed a special charge of $0.55 per share in Q1 2025 to align staffing with demand, signals that demand is not uniform across all legacy services. New entrants can focus precisely on the areas where demand is growing fastest, such as specialized ESG or AI governance, without needing to build out the full spectrum of services FTI Consulting offers.

The immediate threats from new entrants can be summarized as follows:

• Niche boutiques target specialized, high-growth areas like ESG.
• AI platforms automate lower-level advisory tasks.
• Independent consultants offer lower-cost, agile alternatives.
• Demand shifts, as seen in the Economic Consulting segment revenue drop of 22.0% in Q3 2025, create openings.