Management consulting market of Australia books fastest growth in six years

26 November 2018 Consultancy.asia

The consulting market of Australia has recorded its fastest growth in six years thanks to a well performing local economy, with the above 7 percent rise pushing it beyond the $5 billion barrier.

According to data from industry analysis agency Source Global Research, Australia’s management consulting industry has for the first time last year broken through the $5 billion barrier – with the milestone achieved on the back of the market’s fastest growth in six years. The 7.1 percent growth recorded for 2017 marks another year of increasing growth and is triple the rate recorded in 2014.

While individual market analysis agencies measure industry size in differing manners, with Source Global for example excluding the less reliable activity of firms below a certain size and turnover – such that its estimates will often be lower than industry bodies such as local management consulting organisations – the consistent growth in the Australian market paints a telling picture of its own.Size of the Australian management consulting industry ($ / billion)

Since 2014, the Australian management consulting market has witnessed consistent growth, rising from a sluggish figure of 2.4 percent that year to 4.4 percent in 2015, and then to a rate of 5.2 percent the following year and now 7.1 percent in 2017 – a very healthy figure considering the size and maturity of the market, with Australia already featuring one of the highest consulting rates per capita of anywhere in the world.

The researchers pin this solid growth on a number of factors, led by a strongly performing local economy. Other drivers include a renewed client focus on growth, an increasing shift towards digitisation, and the continued big dollars up for grabs from the public sector – a hot-button issue between the country’s two major political parties, with the incumbent Liberal Party in favour of a smaller public service and greater outsourcing.

And the market is being tipped to record further strong growth this year, on the back of last year’s figures, its proximity to a booming Chinese and Southeast Asian market (acting as an outbound stepping-stone), and the recent financial reporting of the three biggest of the Big Four; Deloitte, PwC and EY – which all posted record global hauls for their past financial years with exceptional growth rates in the Asia Pacific.

In quick succession, Deloitte, which has recently merged its Asia Pacific entities, announced record revenues of $43.2 billion with 13.3 percent growth in the Asia Pacific, PwC posted a record haul of $41.3 billion with growth in APAC at 15 percent, and EY reported a record $34.8 billion take of its own, with the Asia Pacific its hottest growth market and Australia noted in particular. Advisory was commonly the three firm’s fastest growing line. And KPMG, which reports globally next year, reported in June local market growth of above 9 percent for FY 2018.

Size of the global management consulting industry ($ / billion)

Accordingly, the Asia Pacific is now the world’s fastest growing management consulting market – on the verge of cracking the $50 billion barrier this year. While still a far cry smaller than the North American and European markets, which respectively command a collective 48 percent and 30 percent share of the world market (now standing at a worth of $135 billion according to Source data), the Asia Pacific now claims a near 15 percent share, with the Australian market accounting for approximately 26 percent of its total.

As for the Australian management market, activity is centred around four primary areas:  financial services (estimated at around 23% of the overall industry), energy & resources (21%), the public sector (18%), and ‘other’, which includes technology-based businesses (38%). Up 8.6 percent last year, technology consulting services are in growing demand, with support for digital initiatives booming, particularly in customer-focused areas such as data and analytics.

B.J. Richards, Senior Editor at Source Global Research, said, “Digitisation is the key driver in Australia’s consulting market, with clients turning to consultants for advice on customer service and experience, while demand for organisation-wide transformation is also spreading quickly. At the same time, data & analytics, moves to cloud-based systems, and RPA feature among the most in-demand solutions for clients.” 36 percent of Australia’s consulting work now concerns digital.

Other strong growth areas included cybersecurity, now at a worth of $910 million and with demand squeezing consultancies to capacity (like elsewhere, Australia is facing a broader digital talent shortfall), the public sector (up 8.2%), thanks to the government’s own digitalisation agenda, and strategy consulting, with businesses forced to consider how best to adapt to a rapidly digitalising market and greater ongoing disruption.

The top 15 strategy consulting firms in Asia and Asia-Pacific

28 September 2018 Consultancy.asia

McKinsey & Company, The Boston Consulting Group and Bain & Company are Asia’s top strategy consulting firms. Analysis of survey data from hundreds of strategy consultants working in Asia reveals that the US-origin ‘MBB’ consultancies have taken the top spots for six consecutive years.

When James O. McKinsey founded McKinsey & Company in 1926, it’s unlikely that he expected he was establishing what is now the world’s largest, and according to many, most prestigious management consulting firm. Today, McKinsey helps the globe’s biggest corporates and governments with their most pressing challenges. The firm claims to serve roughly 90 of the top 100 corporations worldwide and more than 70 of the 100 largest multinationals, while notable recent engagements include helping with the UK Government’s Brexit preparations, the planning of a banking centre of excellence for one of the world’s largest FinTechs, and drafting a strategic design for Deutsche Bank.

McKinsey, BCG and Bain

It is due to this profile of client work that McKinsey is commonly thought of as one of the most prestigious strategy consultancies in the world, by the industry as well as by external experts. In Asia, this is no different, with Consultancy.asia analysing the results of Vault’s annual rankings released for the years between 2013 and 2018 to find that for the past six year period, McKinsey has edged out its top rival The Boston Consulting Group (BCG) to take the number one accolade.

To understand how prestigious a consulting firm is, the researchers asked consultants to rate consulting firms on a 10-point scale. Naturally, consultants were unable to rate their own firm, and they were asked to rate only those firms with which they were familiar. Collating all these scores for the six year period shows that McKinsey and BCG are runaway leaders. In fact, in every single year, the two companies have held the top two spots, with McKinsey edging its rival with four pole positions.

The prestigious work by the firm was illustrated by comments from staff at McKinsey’s Asia-Pacific wing. One said, “I'm extremely thankful that I chose McKinsey over other offers – I'm not sure any other employers could match the calibre of both the people you work with and the problems you work on. At the same time, McKinsey's culture is extremely focused on professional & personal development (e.g. enormous investment in on-going training).” Another added that there was “no better place in the world to learn, develop, make a community, and have an impact on clients.”

The firm’s prestige naturally attracts the next wave of talent, with McKinsey the sole strategy firm named by employer branding consultancy Universum in the world’s top ten most desirable employers’ list for 2018, as assessed though a survey of almost 230,000 business and engineering/IT students including those in China, Japan and South Korea.The top 15 strategy consulting firms in Asia and Asia-PacificThe Boston Consulting Group (BCG) meanwhile was founded by former Arthur D. Little Partner Bruce Henderson in 1963. When speaking about the stringent level of care taken by BCG for its clients, one member of staff said, “You have extremely smart people questioning the burden of proof of your output all the time – and to hold your own and still be able to establish a clear line between work and life is not an easy task. Think about all pros and cons properly – speak to people across tenures in the firm to make sure you have an objective view of both the best and worst things about consulting or BCG.”

BCG was lauded by other Asia-Pacific employees for its “independence, creativity, and entrepreneurial spirit” as well as its “intellectually stimulating work.” Another staffer remarked that he had enjoyed a “rewarding experience. I have fulfilled more than I could have imagined [thanks to BCG’s] senior and global client exposure, strong network of global colleagues, mobility options, and company culture.”

McKinsey and BCG are also the largest strategy consulting firms in Asia outright. In Asia, McKinsey has offices in 17 different countries, including in China, India, Vietnam and South Korea. BCG meanwhile has 28 offices across the region, including in Shanghai, Singapore and Tokyo.

The third top strategy consultancy in Asia is the third member of the MBB trio, Bain & Company. Founded in 1973 by former BCG Partner William Bain Junior (who passed away earlier this year), the firm has since grown into a top three presence in the global strategy consulting industry. Its subsequent success has been due in part to its once innovative focus on not only providing advice, but also helping clients implement a particular strategy.

One Bain employee singled out the firm for praise in terms of its educational emphasis, stating it had “phenomenal learning and development opportunities in a collaborative, [as well as being a] supportive and fun work environment.” Another member of Bain added, “We are a purpose driven company that focuses equally on our clients’ success and our people's success. How rare is that?”

A.T. Kearney, Strategy& and Roland Berger

In fourth spot is A.T. Kearney. The global management consulting firm, which focuses on strategic and operational CEO-agenda issues facing businesses, governments and institutions around the globe, has offices in around 40 countries. The firm originates from a split from McKinsey. James McKinsey hired Andrew Thomas Kearney in 1929 as the firm's first Partner, and when McKinsey died eight years later, Kearney was the Managing Partner of the Chicago office. As suggested by the New York-based partners, the Chicago office split from the rest of company two years later, before being renamed A.T. Kearney in 1949.

When asked what the top pros of working at A.T. Kearney are, one Asia-Pacific staff member noted that the company is focused on “high growth, [and enables the] ability for one person to make a big difference, with exciting and highly strategic work.” Another cited, “high client impact in an engaging collaborative and entrepreneurial environment.”

Following the top four comes Strategy&, however it has clearly been impacted by the sale of what was once Booz & Company, before Booz Allen Hamilton split in 2008. The strategy firm was purchased by PwC, and since then its prestige has dropped. In earlier years it had been a top four player in terms of its reputation, at the upper end of Vault’s rating system. It highlights how Strategy& had a tough time integrating within PwC while maintaining its top strategy consultancy positioning, with many of the firm’s Partners for instance having to drop work in order to avoid conflicting interests with audit work done by PwC. Now, though, Strategy& seems to have recovered from this initial dip and is back on a strong growth path. The firm is also investing heavily in showing that it still belongs at strategy consulting’s top table, maintaining its own branding, recruiting events, and in its thought leadership.

Roland Berger and Deloitte then follow closely in terms of their perceptions as prestigious strategy consulting brands in Asia-Pacific. Roland Berger is the largest European-origin consultancy listed, having been founded by its namesake in Germany in 1967. Deloitte meanwhile is one of the world’s four largest professional services firms. While the multifaceted organisation wears many hats, it is still however known as a prestigious strategy brand in its own right thanks to those services being delivered by Monitor Deloitte, the multinational strategy consulting practice of Deloitte Consulting founded in 1983 by among others strategy guru Michael Porter. Deloitte also provides strategy consulting services through its Strategy & Operations arm within Consulting, and M&A arm within the Financial Advisory Services division.The top 15 strategy consulting firms

Other top strategy consulting firms in Asia

Then comes the group consisting of the rest of the Big Four, Accenture and Oliver Wyman. One of the six pillars of Accenture's business, Accenture Strategy provides business strategy, technology strategy and operations strategy services to clients around the world. KPMG's Global Strategy Group provides according to the firm a new perspective on how to design and implement strategies that win in the modern market, and it is closely followed by Ernst & Young, which has been enhancing its position in the strategy market with its building of EY-Parthenon. Established in 2014 when EY bought The Parthenon Group, EY-Parthenon is now one of the 10 largest strategy consulting firms by headcount in the world following a number of acquisitions, in particular in Europe where it poached three offices from OC&C Strategy Consultants.

Oliver Wyman represents something of a new kid on block, having only adopted its current form in 2007, when Mercer Oliver Wyman joined with Mercer Management Consulting and Mercer Delta to become one firm named Oliver Wyman. Globally, Oliver Wyman has grown into a top tier player in the strategy consultancy space, especially in its key sectors of financial services, aviation, retail and healthcare. However, in Asia the firm is still struggling to achieve the same level of recognition it enjoys in the US and Europe, where in recent years it has ranked consistently in the top eight most prestigious firms. PwC, the parent of Strategy&, is considerably further down the pecking order than its strategy wing, which is understandable, but regardless it ranks as a top 15 strategic advisory firm in Asia and Asia-Pacific thanks to the work of its PwC Consulting brand.

The list of top 15 strategy consulting firms in Asia-Pacific is rounded off by the presence of L.E.K. Consulting, Arthur D. Little and FTI Consulting. L.E.K. Consulting is a management consulting firm headquartered in London and Boston, and as such can be considered the only British-origin firm on the list. L.E.K. was founded in 1983 by three partners from Bain & Company – James Lawrence, Iain Evans and Richard Koch – in London,  and some of L.E.K.'s major project milestones have included strategic and commercial advice for the UK Government on the privatisation of passenger train operating companies in the mid-1990s. The consultancy has eight offices in Asia, in India, China, Japan, South Korea, Singapore and Australia.

In contrast to the relatively young firm, Arthur D. Little is the oldest management consulting brand in the world. The firm was formally incorporated in 1909 by Arthur Dehon Little, an MIT chemist who had discovered acetate. Its roots stretch back even further, however, with Little having started building the company as early as 1886. In Vault's broader global rankings of key employment factors, the modern incarnation of Arthur D. Little was ranked in the top 10 for firm culture, international opportunities, and in the top 15 for relationships with supervisors.

Finally, FTI Consulting is a business advisory firm headquartered in Washington, D.C., specialising in the fields of corporate finance and restructuring, economic consulting, forensic and litigation consulting, strategic communications and technology. The company was established in 1982 by two engineers, Joseph Reynolds and Daniel Luczak, to provide expert witnesses for litigation while providing visual presentations to demonstrate complex technical issues for juries. Its strategy consultancy services are provided mainly by its Economic Consulting and Corporate Finance divisions.