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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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
- In 2019, the global management consulting industry was valued at around $283 Bn and was expected to shrink by approx. 15% in 2020 due to the adverse impact of the COVID-19 pandemic.
- New business models such as crowdsourcing and network-based consulting are evolving in the industry, which can be disruptive in nature. Wikistrat, HourlyNerd, and Business Talent Group, among others, are few companies with such models.
- Several customers of the category management consulting services are expanding worldwide and thus need more advanced and internationally-tailored services.
- Globalization is likely to set the stage for more joint ventures (JV), global expansion, foreign investments, and multinational companies establishing facilities in high-growth geographies.
- Category management consultants are increasingly creating JVs with organizations in other countries to analyze the market. Similarly, some organizations are focusing on acquiring established companies in emerging markets to curb the risk.
- Furthermore, globalization in the management consulting industry is picking pace given rapid internet penetration, advancements in data security, and automation of consultancy tasks.
- Due to internationalisation and the emergence of new categories, the market is expanding rapidly. In addition, technology developments such as ERP consulting and IT training will likely play a significant role in the expansion of the market for management consulting services during the next years. The market continues to expand as a result of the companies' ongoing demand for financial management assistance, which aids in the budgeting and financial planning processes.
- The market for management consulting services is anticipated to grow at a CAGR of more than 6 percent from 2021 to 2026. As a result of the increasing demand for management consulting services, business executives are being targeted and given access to subject matter experts and industry professionals.
- The demand for operational efficiency, regulatory compliance, and technology improvements will lead to rapid expansion in the market for management consulting services. Numerous services are offered by management consulting firms, such as risk management, forensic accounting, internal audits, corporate recovery auditing, and auditing. Few consulting firms also provide integrated services in the fields of advising employee health and benefit plans in addition to investing in consulting actuarial services.
Management Consulting Supply Market Outlook
- This service improves the capabilities and long-term growth prospects of a company.
This service improves the effectiveness of the buyer’s value chain by improving each of the major processes in client operations.
Financial and risk advisory services reduce risk exposure for clients by assuring and justifying business decisions and regulatory compliance. They also support the identification, reduction, and management of business risk.
This service is aimed at managing employee life cycles. It involves consulting with regard to the people component of change management.
Global Management Consulting Services
- North America and Europe are highly mature markets contributing to three-fourth of the global consulting market revenue. Supplier capabilities to serve complex client requirements in these regions are high. The APAC consulting market has relatively lesser market share
Global Management Consulting Market - Regional Analysis
North America and Europe are highly mature markets contributing to three-fourth of the global consulting market revenue. Supplier capabilities to serve complex client requirements in these regions are high.
The consulting industry report suggests that the major growth area is digital technology underscoring the importance of industry in the economic revival and pressing need for the digital transformation of companies in these developed regions.
Despite the persisting uncertainty in the UK surrounding the COVID-19 pandemic and the repercussions of Brexit's completion, the management consulting industry is expected to reach new growth levels in over a decade.
Furthermore, the Asia Pacific (APAC) consulting market has a relatively lesser market share.
Global Management Consulting Drivers and Constraints
For the industry to keep growing beyond 2022, a smooth transfer to contemporary practices is required. The over-reliance on people has made it necessary for consulting firms to find fresh approaches to talent acquisition. Because there are still few competent applicants, using human labour just drives up the cost of completing assignments. Better decisions are made as a result of organizations using big data to expand their operations and come up with ways to use it for clients.
Need for the operational efficiency, compliance to regulations, and technological advancements are driving the demand for consulting services. On the other hand, freelance consulting industry and in-house consulting groups are posing threat to traditional consulting business model
- Shift toward Process Improvement and Efficiency
Organizations are constantly trying to reduce costs and increase their efficiency, so that the cost savings can be transferred to the customers to withstand intense competition. This is leading to growth in demand for business process improvisations and consulting related to operational efficiency.
- Automation and Digital Media & Marketing
MNCs are actively seeking consulting advice on following technology skill sets: Agile, Artificial Intelligence, and analytics. Both product and service corporations are increasingly investing on user experience design, customer-focused data analytics, and customer engagement strategies, so that corporate buyers have greater demand for digital marketing and transformation consulting.
- Regulatory Changes
Regulatory changes, such as the US Tax Reform, BREXIT, EU GDPR (General Data Protection Regulation) and others, have led to an increase in demand for consulting across all major service lines. In order to stay compliant with regulations, multinationals will seek high-value advice, thereby fueling the demand for management and regulation consulting.
Business Model re-inventions
To adapt to the changing customer requirements and advancing technology, businesses are reinventing models for which they require the skill and expertise of category management consultants.
The big data analysis methods used by the management consulting sector, such as data mining employing data lakes and data warehousing, as well as data modeling, must be developed. The business process improvement process will be accelerated by the integration of automated analytics.
- Freelance Consulting Sector:
Pricing and flexibility offered by independent/freelance consultants have led to a rapid expansion of the freelance consulting segment. For instance, in the UK, the independent consulting industry accounts for 10% of the £10 Bn consulting market. The freelance consulting sector is hence expected to eat up traditional consulting firm/industry revenues in the near future.
- In-house Consulting Groups
Large organizations are setting up in-house consulting groups and recruiting former consultants into management positions, thereby reducing the usage of external consultants.
Few other reasons hampering consulting industry growth, revenues, and clientele are time crunch for nurturing client relationships, consultant's need to provide more value to clients at the same cost, and insufficient time to respond to client RFIs/RFPs effectively.
The tools, templates, and models of consultants regarded as intellectual capital can no longer be kept a secret in the internet age. The democratization of knowledge affects the consulting industry.
Cost Structure Analysis
- Cost structures for management consultants vary in wages and profit margins.
- Industry players such as Accenture and Deloitte tend to have high-profit margins owing to their ability to leverage capacity in many fields to boost sales and achieve economies of scale.
- Smaller firms have considerably higher wage costs as profit margins are slimmer and the majority of revenue is paid in wages
Industry profit margins have varied over the past five years, but have generally shown a trend toward expansion, as consultants have enjoyed lessening price competition in a high-demand environment
The industry's largest players are Accenture, Deloitte, and McKinsey & Company
Over the next five years, industry profitability is expected to remain steady, as rising global business sentiment and profit drive new businesses
Due to the intense competition in the industry, operators have placed a premium on hiring highly skilled consultants to provide superior service
Employees often earn high wages, which has increased relative wage spending
Industry operators have hired more consultants with skills (such as Big Data analysis), which has exerted upward pressure on relative wages
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.