Global Market Outlook on Strategy Consulting
Strategy consulting focuses on supporting clients with the development of strategies to support long-term growth. It consists of the following disciplines: Corporate Strategy, Organizational Strategy, and Functional Strategy.
- Business planning
- Growth strategy/market entry
- Value-based management
- Sales and marketing
- Digital Strategy
- Business unit strategy
- Organization design
- Strategic change management
- Strategic programs
The market for strategy consulting is estimated to be worth $31.4 Billion, representing 12 percent of the global consulting market.
The growth is mainly driven by:
- Increased merger and acquisitions, economic growth, growing number of new businesses
- Demand for digital strategy, regulations and cybersecurity consulting
Key growth constraints in the Strategy Consulting market are:
- Organizations establishing in-house consulting groups
- Increased competition from the IT consulting and technology firms resulting in downward pressure on prices thereby reducing profits
- Lack of available talent due to the rise of independent consultants
Indicative Strategy Consulting Market Size
- Healthcare and Pharma industry contributes to approximately 10 percent of the global consulting market. Companies in this industry are using consultants for services in the space of technological innovations and regulations
- Buyer negotiation power for strategy consulting is considered to be medium due to high market concentration and brand power of top consulting firms such as McKinsey, Bain, BCG, PwC, etc.
Strategy Consulting-Market Trends
Clients are demanding innovative techniques to solve their problems at lower costs, which has resulted in new business model such as network based firms and increase in adoption of new pricing models.
Alternative Delivery Models
Network-based staffing firms and freelance consultants are gaining significance as then can cater to requirements on a short notice, at a fraction of the cost of full-service consulting firms, owing to low overheads and absence of full-time staff to pay
Adoption of Outcome Based Pricing Model
As companies are looking to cut costs, procurement and business units constantly face pressure to derive savings out of the consulting spend. Driven by changing customer expectations, consulting firms are increasingly replacing traditional pricing for outcome-based pricing model.
Digitization remains a major driver of the consulting market as the clients are using digital technology for full scale transformation. Data analytics and robotics has gained considerable traction in this region. Solutions built around Artificial Intelligence are expected to drive increasing demand for consultants
Factors Considered While Determining the Pricing Model
Scope of Work
- High Clarity: Clients and consultants choose the fixed-fee or value based model, in which the scope is clearly defined
- Low Clarity: For unclear scope, the time-and-materials model is best suitable
Involvement of Client
- High Client Control: The time-and-materials model provides more control over the projects, but a value based model is suitable to make critical decisions
- Low Client Control: Clients must select the fixed-fee model if they do not have time or capabilities to handle the project
Relationship with Consultants
- New: The time-and-materials model is most suitable for pilot projects
- Old: The fixed-fee or value based models are adopted in the case of a mature client–consultant relationship once trust has been established