This is marketing research on the Management Consulting industry and can include information on the background, market structure, definitions, competitors, trends and developments of management consulting and is related to other topics such as strategy, research, planning, measurements, operations and production.

Table of Contents

1 Background 
2 Market Structure 
3 Market Metrics 
4 Industry Players 
5 Recent Trends and Developments 
6 Sources

Background

The management consulting industry has grown and specialized to meet the needs of today’s global businesses. The practice of consulting continues to change rapidly as new technology develops and as competition within the sector requires that firms innovate and improve their service offerings. To compete effectively, firms are investing in advertising campaigns, employee training programs, and overseas expansion through mergers and acquisitions. The Big Four accounting firms, which are now also five of the world’s six largest management consulting firms, will continue to dominate the professional services global marketplace in the beginning of the 21st century.

In the past few years, management consulting firms have experienced unprecedented levels of expansion. In the last few years most consulting sectors enjoyed revenue increases. Information technology practices reported the highest aggregate growth, followed by operations management,human resources, and management strategy practices. Most forecasters predict that this upward trend will continue as a result of innovation in electronic commerce, heightened competition, and increasing globalization of business.

Market Structure

This is a high growth industry and there have been many new entrants. Perhaps because of its close affiliation with IT services, the number of establishments has increased rapidly over a 5 year period. Growth has exceeded 50% in the last tracking period.

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The growth in employment has matched the increase in number of establishments. Workers have been added to the industry at a very high rate, having increased over 50% in 5 years. The growth in management consulting employment has roughly paralled the growth in related IT industries. Overall professional and business services have prospered in the past few years and management consulting has grown as part of them.

There still appears to be significant opportunity in management consulting as there is no strong concentration of large players. It is a moderately fragmented industry. The four largest players account for slightly more than 10% of industry revenues while the top 50 still only control 30% of industry revenues.

Concentration of Revenue by number of firms in the industry is as follows:

Total Number of firms       Revenue as % of all firms in the industry

     4 largest                               12%
     8 largest                               17.4%
    20 largest                               24.8%
    50 largest                               30.4%

Market Metrics

Revenue growth in management consulting has been above average in the U.S. There has been almost no decrease during the economic pullback around 2000 and 2001. This industry has been unusually resilient at maintaining above average growth. Revenues have almost doubled since 1998 and are currently at approxiamately US $150 billion.

Industry Players

These are major players in this market, but it is not an exhaustive list of all key firms.

Revenues, Net Income and Market Capitalization are expressed in US$ Millions.

Recent Trends and Developments

Some analysts have predicted that growth rates in the management consulting industry will decline and eventually stagnate. However, predictions of slowing growth made in previous years have not been realized, and there are few signs of a slowdown. Instead, expansion of the global economy and new technological advances continue to fuel the consulting industry. Firms are under pressure to hire more consultants, and demand for specialized services is on the rise as customers’ needs diversify.

As a result of the rapid development of electronic commerce, information technology consulting is expected to rise faster than are all the other specializations. The consolidation trend is likely to continue and ultimately could lead to vast alterations in the regulation and structure of the professional service sectors if MDPs (multi-disciplinary paractices) are permitted. Recruitment, training, and attrition issues continue to pose challenges for consulting firms, but, as a whole, the industry is booming and rapid expansion is likely to lead to an overall increase in the workforce. Forecasters predict that firms will continue to engage in recruitment wars and salaries will escalate as firms fight for the top talent among MBA graduates.

As a result of the increasing demand for consultants, training and re-training have become important in retaining employees and fostering company loyalty. In the future, computer-aided training using the Internet probably will be used to help reduce the high costs of employee training programs. Firms will continue to invest in training employees in critical areas such as computer use and public speaking.

Sources

Most current US government sources