Management Consulting Market Characteristics
Management consulting services provide advice and assistance on organization 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, marketing planning and strategy development, productivity improvement, quality assurance and quality control. Clients of the industry include business organizations, non-profit organizations and government agencies. The management consulting services market is labor intensive. Management consultancies invest significantly in industry experts and experienced consultants with specializations in various aspects of a business organization.
Services are now being split into several individual components and sold separately rather than bundled together. There has been a growing trend from clients to pick and choose service elements that can be executed in house and allocate the rest to specific service providers. This approach is called modularization of services and is a response to clients that a single firm would not be able to handle the complexity of a large project and hence wanting four to five firms to collaborate. Alternatively, the client may want to break down the project into various small components that can be allocated to specialized professional firms. Management consulting service providers are collaborating with specialized consulting companies to increase their market share and expertise.
Competitive Landscape of the Management Consulting market
Deloitte, Accenture, PwC, Ernst & Young Global Limited, and KPMG International Cooperative are the top five competitors in the market that made up 11.77% of the total market share in 2017.
In August 2017, Accenture acquired London-based marketing and sales consultancy Brand Learning for an undisclosed amount. This collaboration helps Accenture to extend its sales and marketing. Brand Learning offers marketing capability development consulting and training. It is headquartered in London and has offices in New York and Singapore. The company services 160 clients in over 60 countries.
The countries covered are China, India, Japan, UK, Germany, France, Italy, Spain, Russia, USA, Brazil and Australia.
Management Consulting Market Size
The global management consulting market size is expected to reach nearly $760 billion, growing at a CAGR of 6% during the forecast period. The growth in the management consulting market is due to positive economic trends – the global economy is expected to go through a continued period of steady growth during 2017-2021. The US economy was already showing strong growth in 2015, while the European market is expected to see growth return in the forecast period. The positive economic trends in most parts of the world, especially emerging countries, is expected to result in higher revenues by organizations, leading to increased budgets for consultancy services for administrative management, human resources, marketing, and production. Going forward, such positive economic growth trends and technological advances are expected to drive demand for management consulting services; public Private Investments – Globally, governments of countries across the world have invested in management consulting through collaborations with private players in order to develop and enhance their business operations. For instance, in 2017, the Australian government announced spending of $1 billion on major consulting firms such as KPMG, Ernst and Young (EY), and Deloitte over a period of three years. A total of 1000 contracts were awarded by the government to these firms during the 2015-2016 period. Out of these 1000, around 447 contracts worth $158.9 million was given to KPMG and digital consulting to drive growth – integration of analytics, cloud, media and social media with business models will drive the market in mature and developing market six. This will increase the market for cyber security, IT transformation and social media marketing. Boosted by technological growth, the digital consulting services market is the fastest growing segment within the consulting industry, predicted to increase by more than 60% from 2015 to 2020.
However, the market for management consulting is expected to face certain restraints from several factors such as rising costs and decreasing margins –lack of availability of skilled manpower and growing trend of modularization of services will prove to be a restraint for the management consulting companies. Unavailability of manpower, will lead to an increase in wages, thus impacting the margins. The margins of a firm are also impacted by increasing pressure from clients to decrease pricing. Trends such as modularization in which clients breaks down projects and awards parts of it to specialized professional firms, increases input costs of management consulting firms. This is due to the requirement of a higher capital cost, for developing multiple specializations, thus putting pressure on the market players that are looking to protect margins while maintaining the quality of their services and reduction in free trade– many developed and developing economies are potentially imposing restrictions on free trade to boost their local economy. Brexit is likely to lead to more trade restrictions between the UK and other countries in Europe. US President Donald Trump is expected to adopt a more protectionist stance and renegotiate many trade agreements, including NAFTA. These changes could set off a wider trade war reversing the recent trend towards greater global free trade. For example, according to a report by the International Monetary Fund in 2015, rise in trade barriers, could increase import prices by about 10% and decrease exports by 15% in the next five years, thus affecting the growth of the management consulting services market.
Management Consulting Market Segmentation
The global Management Consulting market is further segmented based on type and geography.
By Type - The management consulting market is segmented into operations advisory, financial advisory, technology advisory, strategy and HR advisory.
By Geography - The global management consulting market is segmented into North America, South America, Asia-Pacific, Eastern Europe, Western Europe, Middle East and Africa. North America management consulting services market is the largest region in the world. It currently accounts for almost $250 billion, or more than 40% of the global management consulting services market. Digitalization supports the management consulting services market in North America. The USA holds the major share of the North America management consulting services market. The USA’s management consulting services market is the most mature in aspects such as firm professionalization, offerings and innovation in the consulting domain.
Management Consulting Market Trends
Management consulting service providers are collaborating with specialized consulting companies to increase their market share and expertise, which is a major trend in the global management consulting market.
Potential Opportunities In The Management Consulting Market
With growth in emerging market and rapid globalization, the scope and potential for the global management consulting market is expected to significantly rise in the forecast period.