Companies & Industries

Where the Growth Is in Management Consulting


Good news for U.S. management consultants: An overwhelming percentage of clients plan to keep hiring them.

Over the next 12 months, 82 percent of the U.S. clients surveyed by market researcher Source Information Services say they won’t cut the amount they spend on outside help. And nearly half, 42 percent, plan to bring in even more consultants, while 5 percent expect to boost their spending on consultants by more than 50 percent.

Pressure among clients to keep head count low is stimulating growth for consulting firms—at least for the short term, says Fiona Czerniawska, founder of Source. But as the economy rebounds, she says clients may start to “relax head-count restrictions,” dampening that source of growth.

The research organization surveyed 250 U.S. consulting clients (mostly at the C-suite level) and conducted in-depth interviews with another 50 executives.

The U.S. market for management consulting grew 8.5 percent last year, to $39.3 billion. The fastest-growing areas: marketing and sales (25.6 percent), operational improvement (11.3 percent), and technology (10.1 percent). High-growth industry sectors include: health care (18.4 percent), energy (12 percent), and pharmaceuticals (10.3 percent). “After a difficult few years, things are finally getting back on track,” the report states.

Where do U.S. companies need help? Not surprisingly, digitization is high on the list, which the research firm says is benefiting consulting companies IBM (IBM), Deloitte, and Accenture (ACN), leaders in this area. “Where the rest of the world talks about globalization, America talks about digitization,” according to the report.

U.S. companies, however, are spending much less on strategy consulting. That sector is expected to grow just 3.7 percent next year, not good news for McKinsey, Bain, and other leading strategy specialists. Look for those firms to continue to diversify into other areas, such as implementation and organizational design, as well as tech. “It’s hard to separate technology from strategy these days,” says Czerniawska.

The survey had something else for U.S consultants to ponder: If consulting companies halve their fees, 59 percent of the clients surveyed would “buy a lot more consulting.”

Don’t expect consulting firms to start slashing fees, however. “That’s a cul de sac you can’t get out of,” says Czerniawska. What that response suggests, she says, is the inelasticity of consulting prices, because it would take a huge cut to stimulate growth. Rather, she points out, consultants should focus on communicating the value they add and differentiating themselves from competitors. That’s advice every management consultant can easily grok.

Sager is director of special projects for Businessweek.com.

Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • IBM
    (International Business Machines Corp)
    • $193.66 USD
    • -0.91
    • -0.47%
  • ACN
    (Accenture PLC)
    • $80.42 USD
    • -0.15
    • -0.19%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus