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US Management Consulting Market Hits $58 Billion    [Date Added : 08/14/2017 ]
The US consulting sector is the largest and most mature market of its kind, accounting for nearly 50% of the world's consulting income. According to studies by Source Global Research and, this US sector has seen sustained expansion over the past five years, however 2016 was an especially strong year which saw annual growth of 7.7% as it reached an annual value of US $58.72 billion.

The demand for digital transformation consulting played an instrumental role in the upturn, while high demand for cybersecurity also drove growth as clients attempted to safeguard their digital products and services.

The industries that benefitted most from the sustained consulting growth in the US were Retail, Financial Services and Technology Media and Telecommunications (TMT). Retail continues rapidly expanding; much of the consulting work here relates to clients seeking assistance for their omni-channel offerings as they attempt to fight off challenges from digital disruptors, such as Amazon.

Last year was a difficult year for those consulting in the US public sector, however, as a challenging procurement landscape put pressure on fees and made winning work difficult. Governmental procurement is a volatile segment of business. The report noted that these challenges were compounded by intense price pressure and the drip-feed release of funds for consulting, meaning their future remains uncertain.

The report further found digital innovation now played a greater role across traditional service lines as demand for company-wide digitization initiatives once again grew. Technology consultants subsequently had an exceptional year as clients sought to update infrastructure with modernized systems. An upsurge in future-proofing also benefitted strategy consultants, as many clients forged ahead with growth plans despite anxieties around global political and economic uncertainty.

As the strain of regulation lessened across the US financial services industry, financial institutions increased their consulting spending by more than US $1 billion in 2016 - a 8.3% increase to reach a total value of US $14.8 billion - as they sought to implement new technologies, such as RegTech, Artificial Intelligence (AI), cognitive computing and robotics. Robotics provided consulting firms in the US financial services industry with the most tangible opportunities with the automation of simple processes forming the bedrock of this work. Cybersecurity meanwhile became a hot topic, with demand for cybersecurity work booming by a 30% increase, with revenues reaching over US $7 billion.

It is estimated that one in every US $6 budgeted for professional service consultation is spent on digitization. Global digital transformation consulting alone now amounts to more value than many localized consulting markets, having grown to twice the size of Britain's consulting market and five times larger that China's consulting market. Source's researchers estimate that 59% of the total market is made up of the ten largest firms in the sector, and 21% of business was taken up by the Big Four - though largely this portion is made up of Deloitte's dominance (12% share of the market), followed by Accenture and McKinsey & Company.

The large strategy consulting firms originating from the US have come to dominate the globe; in particular, they have come to rule the higher echelons of the management consultancy space. While many had thought that rise of digital could mean threat to strategy firms, data shows that contrary is true. Digital transformation poses large opportunity for strategic firms, including McKinsey, Boston Consulting Group, Bain and Strategy&. Central to this sustained importance of strategists is that the implementation of digital has a major impact on corporate strategy and digital business models.

US clients are across the board relatively satisfied with the support they are receiving from external management consultants - overall, US clients are more positive than any other region the analyst firms surveyed. Senior customers were asked to rate the quality of work of the three most important consulting firms they work with, finding that 18 of the 19 firms studied score an overall satisfaction score of between 70% and 79%. IBM Global Business Services - the consulting arm of the US giant - is the top-rated firm for the quality of its work: 79% of its clients described its work across ten different consulting services as of "high" or "very high" quality. McKinsey & Company came in on second place (78%), followed closely followed by A.T. Kearney (77%)

Previous data from Source had found that IBM also ranks top when it comes to the quality of thought leadership. IBM beats its competitors on appeal, resilience, and prompting action, while Deloitte, who ranked second overall, leads the way on differentiation. Research reports, white papers and other studies of over 20 global consulting firms were taken under scrutiny, on four evaluation criteria (resilience, differentiation, appeal, and prompting action, with Oliver Wyman, PwC and EY closing the top five.

Surprisingly, McKinsey Global Institute, McKinsey's research arm which was named the world's best private think tank, is not in the top-five named by Source. The same applies for other consultancies which are generally renowned for the quality of their research work, including A.T. Kearney, Strategy&, BCG, Bain and Roland Berger. They all fell outside the top positions of Source's ranking, highlighting how research metrics play a role in the landscape.

US clients are likely to recommend IBM and Accenture, highlighting client’s large preoccupation with technology these days in light of rapidly changing digital environment. Deloitte and Bain & Company follow, while McKinsey and KPMG tie up as fifth most spoken about consultancies.

("US Management Consulting Market Grows to $58 Billion, Top 40 Firms,", July 20. 2017. Copyright 2017
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