Management Consulting
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Global Market Outlook on Management Consulting 

• In 2017, the global management consulting industry was valued around $260 billion, and it is expected to grow at ~4–5 percent to reach $285 billion by 2019
• In 2018, the global management consulting industry was valued around $272 billion, and it is expected to grow at about 4–5 percent to reach $295 billion by 2020
• New business models like crowdsourcing and network-based consulting, are evolving in the industry, which can be disruptive in nature. Wikistrat, HourlyNerd Business Talent Group are few companies with such models

Management Consulting Supply Market Outlook

Strategy Consulting

• This service improves the capabilities and long-term growth prospects of a company.

Operations Consulting

• This service improves the effectiveness of the buyer’s value chain by improving each of the major processes in client operations.

Financial Advisory

• Financial and risk advisory services reduce risk exposure for clients by assuring and justifying business decisions and assuring regulatory compliance. They also support identification, reduction and management of business risk

HR Consulting

• This service is aimed at managing employee lifecycle. It also 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 Drivers and Constraints

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

Drivers

• 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 customer as a means 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, like 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 to regulations, multinationals will seek high-value advice, thereby fueling the demand for the management and regulations consulting

• Business Model re-inventions

           To adapt to changing customer requirements and advancing technology, businesses are re-inventing business models for which they require skill  and expertise of category management consultants.

Constraints

• Freelance Consulting Sector:

Pricing and flexibility offered by independent/freelance consultants has led to rapid expansion of freelance consulting segment. For e.g., in the UK, independent consulting industry account for 10 percent of £10 billion consulting market. 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.

• Miscellaneous:

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 unavailability of sufficient time to effectively respond to client RFIs/RFPs

• Knowledge Commoditization:

           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, like Accenture and Deloitte, tend to have high profit margins, due 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 majority of revenue is paid in wages

Profit

• 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

Wages

• 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