Management Consulting services consists of sales of consulting products, services, and packages by organizations who provide advisory and assistance functions to their clients related to several domains (but not restricted to) like planning, cost analysis, budgeting, marketing strategies, administration, and human resource practices, production and logistics scheduling, etc. The task of management consulting is categorized under outsourced activities by the consumers.
The global management consulting market was valued at USD 313 billion in 2020 and it is projected to reach approximately USD 630 billion by 2027. While most of the sectors suffered a decline during the pandemic, management consulting boomed during this period., having grown at a rate of 12.7% from 2020 to 2021. Regionally, North America and Europe are the largest markets for management consulting with most of the renowned consulting firms being headquartered or located in either USA or Western Europe. Together, they occupy over 75% of the global management consulting market. However, a significant number of their employees operate from APAC due to the low cost of employment for such companies. The industry, in general, is expanding with different categories of consulting arising due to the demand from developing technologies. This will help bolster the market during the period of forecast.
From an end-user perspective, financial services and the manufacturing sector are the largest consumers for management consultants. Financial sectors contribute approximately 25% of the overall revenue generated by the management consulting sector. This is followed by the manufacturing sector which helps generate over 15% of the overall revenue.
One of the major cost heads that the management consulting industry faces is wage. Since the industry is human-driven, wage accounts for approximately 50% of the cost incurred by a management consulting service provider. To reduce costs, management consulting service providers are employing technologies that help store and retrieve data, aid in data analysis, or help in data visualization. These tools help reduce the time taken by employees to conduct the manual repetitive tasks, which once automated, saves employee hours to focus on work that can otherwise not be mechanized, hence improving overall productivity. In addition to automation, companies are also employing steps for process improvement. Presently, the market is fragmented and has a significant share of management consulting service providers. Therefore, there are price wats and competitive rates available in the market space. As such, companies need to streamline operations to improve profit margins.
The rise of freelance consultants is posing a threat to organized management consulting companies. While freelance consulting is largely unorganized, it is still significantly cost-effective as compared to the rates charged by a management consulting service provider. Hence, a substantial amount of data collection tasks or raw data cleansing exercises are expedited to freelance consultants. Also, the growing requirement for management consulting is making several organizations, particularly in the financial sector, set up in-house teams that provide management consulting options. Most often the employees recruited are ex-employees of management consulting firms. This poses a direct threat to the management consulting service providers.
The key suppliers for management consulting are Deloitte Touche Tohmatsu Limited, Accenture Plc, International Business Machines Corporation, Ernst & Young Global Limited, PricewaterhouseCoopers (PwC), KPMG, Marsh & McLennan Companies, McKinsey, BCG, AECOM, etc. Apart from these, new business models like crowdsourcing and network-based consulting are also coming into the mainstream. Companies like Wikistrat, HourlyNerd, and Business Talent Group are some of the known brands that operate in the aforementioned business model. The market is highly fragmented with an abundance of service providers in all tiers. However, lower the tier, higher the bargaining power for the customers. In the upcoming years, the market is expected to go through a series of mergers and acquisitions as a result of globalization in the management consulting industry. Grand View Research will help our client identify the best-suited suppliers by mapping their core capabilities and operational efficiency.
Component wise cost break down for better negotiation for the client, highlights the key cost drivers in the market with future price fluctuation for different materials (e.g.: steel, aluminum, etc.) used in the production process
Offering cost transparency for different products / services procured by the client. A typical report involves 2-3 case scenarios helping clients to select the best suited engagement with the supplier
Determining and forecasting salaries for specific skill set labor to make decision on outsourcing vs in-house.
A typical newsletter study by capturing latest information for specific suppliers related to: M&As, technological innovations, expansion, litigations, bankruptcy etc.
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