Expenditure on Management Consulting Services Is Set To Rise

Source Global Research is a team of London-based experts providing research, data, and strategic advice about the global management consulting industry. They analyse, report on and forecast consulting market trends and work with clients to develop growth strategies. They recently carried out research to determine how the management consulting industry will fare in 2019, the sectors and services that will grow, and gathered information from clients in different sectors on their plans for consulting spend this year. For procurement teams sourcing and buying consulting services, this is useful research to help understand trends in demand.

We talked to the firm about what they found out, here’s what they told us:

“Macroeconomic uncertainty and political turmoil appear to be having only a limited impact on the world’s $135bn consulting industry. Our analysis suggests that, although the growth in demand for consulting services will slow slightly, from the 7% to 8% seen in recent years to closer to 6%, most organisations expect to spend more in the next 1 to 2 years. Based on our survey of around 3,000 senior executives in major consulting markets, 59% say that their expenditure will increase, against 21% who say it will decrease. The biggest increases are expected to be in demand for support around data and analytics, and digital transformation.

But the high-level performance of a market often masks wide variation at the more granular level: just because one retail bank—for example—plans to increase its expenditure on consultants, it doesn’t mean that all retail banks will. Procurement professionals working in this area will recognise the warning signs: contemplating or completing a big acquisition usually creates an obvious spike in demand for outside help; the arrival of a new consultant-friendly CEO can overturn years of careful control of expenditure. But other indicators of an organisation’s propensity to use consultants are harder to gauge.

We have also been looking at how consulting spend is likely to change at the micro-level, with the aim of helping organisations understand how the strategic choices they make have repercussions for their use of consultants. We found, for instance, that initiatives aimed at cutting heads, while they might reduce an organisation’s salary bill, often result in an increased willingness to spend on consultants. Savings in one area may therefore be outweighed by costs in another.

By gathering a wide range of metrics together, we have identified significant differences in organisations’ propensity to spend on consulting, even compared to their immediate competitors in the same sector. This suggests that, with a better understanding of what’s driving expenditure, procurement teams could have a quantifiable impact on spend levels in this complex and often opaque market.”

So if you are responsible for buying consulting services and would be interested to hear more about the firm’s research and trends in the consulting industry more generally, they are holding a seminar in central London on February 28th from 4pm, where results and impact will be discussed.  To find our more and to reserve a place, email Lindsay Stark  (lindsay.stark@sourceglobalresearch.com)

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