RALEIGH, North Carolina, Oct. 23, 2019 /PRNewswire/ -- The global management consulting industry is expected to continue growing at a rate of 4-5 percent, according to Beroe Inc., a procurement intelligence firm. Within management consulting, Operations Consulting holds the largest market share of 28.4 percent and is growing at a rate of 3-4 percent, followed by Financial Advisory with market size of 28 percent and growth of 4-5 percent.
The market in North America is estimated to be worth $109 billion and is growing at a rate of 3–4 percent annually, followed by Europe, estimated at $107 billion, with an annual growth rate of 3–4 percent. The Middle East market, valued at $3 billion, is the fastest-growing, with an annual growth rate of 9-11 percent, followed by the APAC, valued at $44 billion, growing at 6–7 percent annually.
Beroe, which is based in North Carolina, further stated that procurement experts can access this report on its recently launched market intelligence platform Beroe LiVE: live.beroeinc.com
The need for operational efficiency, compliance with regulations, and technological advancements are driving the demand for consulting services. To adapt to changing customer requirements and advancing technology, businesses are re-inventing business models for which they require the skill and expertise of consultants. On the other hand, the freelance consulting industry and in-house consulting groups are posing threat to the traditional consulting business model. The tools, templates, and models of consultants regarded as intellectual capital can no longer be kept a secret in the internet age and the democratization of knowledge is challenging the consulting industry.
New business models, such as crowdsourcing and network-based consulting, are evolving in the industry, which can be disruptive in nature. Crowdsourcing is a rapid way of obtaining a different range of perspectives for a given set of issues and some of the consulting firms have already initiated crowd-sourcing efforts as part of their consulting portfolio. Pricing and flexibility offered by independent/freelance consultants have led to the rapid expansion of the freelance consulting segment. Clients are transitioning from traditional consulting to more collaborative arrangements in which clients can leverage multiple consultancies to offer comprehensive services.
There is a minimal threat of substitutes because the only possible threat comes from the buyer developing an internal team. The acquisition trend also reduces the threat of substitutes.
Buyers' power will increase because of low switching costs between consulting firms. Large buyers have strong buyer power because they have the option of offering sustained business to the consulting firms.
Top sourcing models are In-house, global Sourcing, Hybrid Sourcing, Regional/Country Sourcing. The hybrid sourcing model is preferred by medium- and large-sized buyers to achieve a balance between cost and quality while global sourcing is preferred for enterprise-level consulting needs, such as for strategy and audit.
Cost structures for management consultants vary in wages and profit margins. Industry players tend to have high profit margins, while smaller firms have higher wage costs, as profit margins are slimmer and the majority of revenue is paid in wages.
Management consultants tend to attract the most lucrative deals in North America; however, strong growth from emerging markets, such as China, India, Mexico, and parts of Asia Pacific, increases the profit margins.
The research methodology adopted for the report included:
Experts with twenty years of domain experience
Interaction with buyers
Inputs from supply chain partners
Major cost components in the management consulting industry are wages, accounting for 48 percent of the total costs, followed by purchase for 13 percent and rent & utilities for 4 percent. Top-tier firms (Fortune 500 firms) have a 1-3 percent consulting spend as a percentage of organizational expenditure, averaging at $100-150 million. Mid-tier firms have a consulting spend of 3-5 percent, in the range of $50-100 million while low-tier firms have a 5-7 percent consulting spend amounting less than $50 million.
The report also includes:
Market Maturity and Trends
Drivers and Constraints
Regional Market Outlook
Mergers and Acquisitions (M&As)
Cost and Pricing Analysis:
Procurement Best Practices:
Industry Sourcing Adoption
Service Level Agreements (SLAs) and Key Performance Indicators (KPIs)
Cost-saving Opportunities and Negotiation Levers
Billing Rate Benchmarking:
Factors Affecting Billing Rates
Billing Rate Methodology
About Beroe Inc.:
Beroe is the world's leading provider of procurement intelligence and supplier compliance solutions. We provide critical market information and analysis that enables companies to make smart sourcing decisions—leading to lower costs, greater profits and reduced risk. Beroe has been providing these services for more than 13 years and currently works with more than 10,000 companies worldwide, including 400 of the Fortune 500 companies.