Management consulting is an advisory and/or implementation service provided to the organisations with the aim of improving the effectiveness of the firm's business strategy, organisational performance and operational processes.
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EY US all set to cutdown workforce by 5%April 20, 2023
ECG Management Consultants makes leadership changesApril 19, 2023
Oceanic Consulting Group launches a new Business Resiliency practiceApril 18, 2023
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Management Consulting Industry Benchmarks
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The industry average payment terms in Management Consulting category for the current quarter is 59.6 days
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Management Consulting market frequently asked questions
As per Beroe's industrial report, the market size of each continent varies. For North America it's $109 Bn, for Europe, it's $107 Bn, for Asia Pacific region, the market size is $44 Bn, and for Latin America, it's just $8 Bn.
There are 3 key players in the management consulting industry - Deloitte, Accenture, McKinsey & Company as they have high-profit margins. If we look at it from the perspective of management consulting market share, we find that North America and Europe are highly mature markets contributing to nearly three-fourth of the global market share, while the APAC region has relatively less market share.
As per Beroe's management consulting market research report, the management/business consulting market size is expected to grow nearly by 4-5 percent to reach $295 Billion by 2020. As per the report, in the next 5 years, industrial profitability is expected to remain stagnant, as rising business sentiment and profit will drive in more business.
The onset of technology skill sets like Agile, Machine Learning, etc. are forcing the MNCs to seek consulting advice. They're trying to minimize their costing and focus on efficiency to stand at par with their competitors. This need for operational efficiency, compliance with company regulations, and tech advancements are driving the entire global management consulting industry.
Management Consulting market report transcript
Global Market Outlook on Management Consulting
The global management consulting industry witnessed a rapid rise in demand in 2022, as companies focused on various transformation initiatives to navigate the pandemic
The global management consulting market has recorded a revenue of $300 billion in 2022 and is growing by a rate of 8- 10 percent in 2023 to reach $324 billion. In 2023 the global consulting market would be driven by an increase in demand for consulting services, especially ESG services, digital transformation, supply chain and operations consulting services, etc.
Billing rates are recording a growth of 2–5 percent in 2023, driven by an increase in demand across various service lines
Global Management Consulting Market Maturity
North America and Europe are highly mature markets contributing to three-fourth of the consulting revenue. Supplier capabilities to serve complex client requirements in these regions are high. The APAC consulting market has relatively lesser market maturity.
Global Management Consulting Drivers and Constraints
Digitization, need for operational efficiency, restructuring, and cost reduction initiatives are driving the demand for consulting services.
Demand for management consultants is mainly driven by:
Companies looking to improve productivity and operational efficiency
Cost reduction initiatives by companies, amidst COVID-19 and workforce planning
Digital Transformation Strategy, Business Transformation, etc., to navigate the technology advancements
Compliance requirements to regulatory changes, such as BREXIT, EU GDPR, US Tax Reforms, etc., requiring advisory support
Companies focusing on business model re-inventions and exploring growth opportunities
Companies seeking advisory support for Mergers and Acquisitions
Key constraints faced by management consulting firms are:
Rapid expansion of independent/freelance consultants, due to lower fees and flexibility offered
Large organizations are setting up in-house consulting groups and recruiting former consultants into management positions, thereby reducing the usage of external consultants
Knowledge commoditization, which is availability of consulting firm’s intellectual property in secondary sources
Most organizations, including Big Four firms, are facing talent shortage across the globe and the battle for talent getting challenging, in terms of cost, as well as employee retention. Consulting firms are therefore identifying key skills required and are upskilling their employees
Cost Drivers of Management Consulting
Compensation accounts for major portion of the consulting firm’s cost structure. Geographic presence of the staff, regulatory changes and other overhead costs are the major cost drivers in consulting industry.
Demand for Senior Resources
There is significant competition for senior resources who bring specialized expertise due to scarcity of supply
Consulting firms need to continuously invest in hiring and retaining the best experienced talent
Compensation varies based on location of staff
Use of junior resources in low-cost countries for non-client facing roles can lower staff cost
- For consulting firms having offshore locations in developing nations of Asia and Africa, as well as for advisory clients located in developing countries, the consultant fees is paid in local currency (and not USD), hence the consultant fees tend to be lower
Demand for consulting and capacity in terms of number of employees drives the consulting cost
Lower utilization rate increases the operating cost and reduces the profitability of a consulting firm
Inflation, legal fees arising due to any law suits, regulations, market conditions etc. drives consulting cost
Costs of compensation, benefits and office rent generally tend to increase over the period
Supply Trends and Insights : Management Consulting
New Operating Model in Consulting
As virtual consulting model evolves, significant amount of consulting work is expected to take place remotely with limited onsite travel, even after the pandemic ends
The new operating model consists of local consulting specialists supported by SMEs across the globe, who reports to engagement partner travelling to client location at regular intervals and work remotely during the course of the project
There is a growing demand for managed services model in consulting, as companies look to reduce costs
This model consists of consulting firms, implementing proprietary solutions for repeatable consulting processes to ensure efficiency and cost reductions
Tier-2 suppliers are differentiating by improving their domain expertise in niche areas to provide deep domain consulting and through investment in marketing to improve brand perception
Small Players Carving Out Niche Market Share
The top consulting firms, such as the Big Fours, McKinsey, Bain BCG, etc., continue to hold a significant market share
Small firms are changing the market dynamics by carving out the share in niche markets with specialized services
The firms that are fast growing (small and big) are witnessing a triple-digit growth rate
Most Adopted Model Globally: Single supplier sourcing strategy
Why: To achieve better implementation and better negotiation on price
Pricing Strategy: Shift from fixed-fee to value-based or performance-based pricing
Why Should You Buy This Report?
- Gather a global perspective with the most extensive research study available on the category management consulting market covering several geographies.
- Understand the impact of the COVID-19 pandemic on the market and how it will emerge and grow as the pandemic subsides.
- Develop strategies at a regional and national level based on the local insights and assessment.
- Outpace industry competitors with the help of projection data and the consulting industry trends and drivers.
- Recognize growth segments for investment.
- Understand consumers as per the recent consulting industry report findings.
- Utilize the relationships between key data sets for superior strategizing.
- Determine performance against leading market players.
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