Management consulting market of Australia books fastest growth in six years

26 November 2018 5 min. read

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.