Management Consulting Market Definition
The management consulting (MC) market consists of the sales of MC services and related goods by entities (organizations, sole traders and partnerships) that provide a range of services providing advice and assistance on organizational planning, financial budgeting, marketing strategies, human resource practices, administration policies and production and logistics scheduling. Such services include solutions for administrative management issues, strategic and organizational planning, business process improvement, human resource and personnel policies, developing marketing planning and strategy, productivity improvement, quality assurance and quality control.
Management consulting providers undertake processes where human capital is the major input. They make available the knowledge and skills of their employees, often on an assignment basis, where an individual or team is responsible for the delivery of services to the client.
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Management Consulting Market Size
The global management consulting market expected to reach a value of nearly $977.3 billion in 2018, having grown at a compound annual growth rate (CAGR) of 8.6% since 2014, and is expected to grow at a CAGR of 10.6% to nearly $1,460.2 billion by 2022.
Growth in the historic period resulted from the strong economic growth in emerging markets, regulatory reforms in the financial sector, outsourcing of back-end operations to low-cost economies, and public investments. Factors that negatively affected growth in the historic period were shortages of skilled workers, and political and social instability.
Going forward, faster economic growth, the emergence of digital consulting, and the rise of globalization will drive growth. Factors that could hinder the growth of this market in the future include rising costs and decreasing margins, advances of artificial intelligence with a potential to replace management consultants and in-house management consulting teams in big technological companies.
Management Consulting Market Drivers
The key driver of the management consulting market includes:
Digital Consulting To Drive Growth – Integration of analytics, cloud, media and social media with business models is expected to drive the management consulting market during the forecast period. Digital consulting services are the fastest growing segment within the consulting industry, and are forecast to increase by more than 60% from 2015 to 2020. This will increase the market for cyber security, IT transformation and social media marketing, and boost the digital consulting services market in the forecast period.
Management Consulting Market Restraints
The key restraints on the management consulting market include:
Advances Of Artificial Intelligence – The rise of artificial intelligence (AI) projects in the management consulting field is likely to limit the growth of the management consulting market in the forecast period. It is expected that advanced AI technology in the forecast period will replace some share of management consultants in the industry. For instance, after collaborating with UBS Group AG, a Swiss multinational investment bank and financial services company, Amazon’s Alexa, a virtual assistant developed by Amazon, can answer economic questions for clients of UBS Group AG. A new partnership allows some of UBS’s European wealth-management clients to ask Alexa certain financial and economic questions, which Alexa answers with the information provided by UBS’s chief investment office without any external search online . The offering of business services by AI is likely to expand in the forecast period, restraining the growth of the management consulting market.
Management Consulting Market Trends
Major trends influencing the management consulting market include:
Virtual Firms In The Management Consulting Industry – Rapid technology change, increased pressure to reduce costs, and increased use of smartphones are introducing the concept of virtual firms to market players in the management consulting industry. It is expected that a high number of management consulting firms will go virtual and have few permanent offices. By hiring contract employees, placing the entire infrastructure in the cloud, and utilizing a small number of physical offices, management consulting firms will be able to cut costs and increase revenues. Companies such as Aepiphanni Business Consulting have already adopted a virtual firm concept and are providing management consulting to their clients online.
IT Transformation In Management Services –With the emergence of information communication and technology, the world is rapidly moving towards the process of digitalization. Investor expectations, rising competition, new regulatory pressures and increasing opportunities are putting organizations under pressure to digitalize their processes and management. Management consulting firms are providing IT transformation services to businesses, banks and other organizations to overcome challenges such as rising stakeholder expectations and flat or declining budgets. Such services include identifying critical technologies, setting an IT agenda, consolidating, standardizing and harmonizing IT solutions across business divisions in a cost effective manner. For example, Accenture Consultancy increased its revenues from the communications, media & technology division by 16.6% from 2017 to 2018 due to increased demand for digital transformation for management services.
Opportunities And Recommendations In The Management Consulting Market
Opportunities – The top opportunities in the global management consulting market will arise in the financial advisory segment which will gain $163.34 billion of global annual sales by 2022. The management consulting market size will gain the most in the UK at $57.61 billion. Market-trend-based strategies for the management consulting market include modularization of services, increased focus on technology advisory, and adoption of value-oriented revenue model and others. Player-adopted strategies in the management consulting industry include reinforcing M&A strategies, expansion in other geographies, and expanding advisory services to small and medium social enterprises.
Recommendations – To take advantage of the opportunities, The Business Research Company recommends the management consulting companies to consider focusing on technology advisory offerings, launching virtual management consulting firms, expanding in emerging markets, focusing on expanding their product portfolio through collaborations, and offering services to pre-retirees, among other strategies.
Management Consulting Market Segmentation
The management consulting market is segmented by type of service, by end-use industry and by geography.
By Service Type-
The management consulting market can be segmented by type of service into
- a) Operations Advisory
- b) HR Advisory
- c) Strategy
- d) Financial Advisory
- e) Technology Advisory
Financial advisory had the highest growth rate of nearly 10.1% during the historic period. The fastest growth in the historic period can be attributed to reemergence of ‘mega mergers’, along with a low interest environment creating the opportunity for ambitious financial planning.
By End Use Industry-
The management consulting market can be segmented by end use into
- a) Financial Services
- b) IT Services
- c) Manufacturing
- d) Construction
- e) Mining And Oil & Gas
- f) Others
- g) Other Services
Growth has accelerated in all segments of the management consulting market segmented by end user industry except for the ‘Others’ segment, where it declined slightly.
By Geography- The management consulting market is segmented int
- o North America
- o Western Europe
- UK
- Germany
- France
- Spain
- Italy
- o Asia Pacific
- China
- Japan
- India
- Australia
- o Eastern Europe
- o South America
- o Middle East
- o Africa
Western Europe is the largest market for management consulting, accounting for 33.8% of the global market. It was followed by North America and Asia-Pacific and then the other regions. Going forward, South America and Africa will be the fastest growing regions in this market.
Management Consulting Competitive Landscape
Major Competitors are:
- • Deloitte Touche Tohmatsu Limited
- • Accenture Plc
- • International Business Machines Corporation
- • Ernst & Young Global Limited
- • PricewaterhouseCoopers (PwC)
Other Competitors Include:
- • KPMG International
- • Marsh & McLennan Companies, Inc.
- • McKinsey & Company
- • Boston Consulting Group, Inc.
- • AECOM
- • SGS S.A.
- • Grant Thornton LLP
- • BD
- • LLP
- • Paychex, Inc.
- • RSM International
- • Baker Tilly International
- • KBR, Inc.
- • Ramboll Group A/S
- • Poyry Oyj
- • Management Consulting Group PLC
- • FTI Consulting
- • ABeam Consulting
- • L.E.K Consulting
- • Aon Hewitt
- • Strategy&
- • Tata Consultancy Services
- • Oliver Wyman
- • A.T. Kearney
- • Roland Berger Strategy
- • L.E.K. Consulting
- • Accenture
- • HLB Russian Group
- • Moscow Consulting Group
- • Kesarev Consulting
- • Alvarez & Marsal
