Australia's consulting industry revenue to breach $6 billion in 2020

28 October 2019 Consultancy.com.au

Australia’s management consulting industry is expected to continue its strong growth in the coming years, riding on the wave of continued high demand for growth and digitisation services, in both the public and private sector.

Valued at around $US5.8 billion, Australia is home to one of the globe’s larger markets for management consultants. Only powerhouse markets such as the US, the UK and Germany are larger, while the French consulting market is of roughly comparable size. Sizing data from Source Global Research – an analyst firm to the professional services industry – further estimates the Australian consulting industry to be worth nearly one quarter of the entire Asia Pacific region. 

Over the past six years, Australia’s management consulting industry has enjoyed consecutive years of growth, and according to the analysts, there are no signs of slowing. By 2021, the industry is expected to have added about $US1.3 billion in fee income to its total, at a compound annual growth rate of 7%, meaning that it will breach the $US6 billion barrier in 2020 and be worth $US6.7 billion the following year.

To meet the insatiable demand for consultancy services, consulting firms will need to ramp up their headcount by some 4,500 consultants to almost 20,000 by 2021. Today, Australia-based management consulting businesses employ around 15,500 consultants. 

Australia's management consulting industry size

Most of those are housed within the Big Four. EY, Deloitte, KPMG and PwC are enjoying a sustained boom in Australia – all three have grown their revenues by 20% or more in the years up to FY18. Consulting has been the undisputed driver, both in revenue volume as well as in margins. Bulging out consulting arms has seen their share of the Big Four’s revenue mix in Australia reach record levels, with the stake of audit now at an all-time low of between 14% and 21%. In addition, average fees (revenue per consultant) are higher in consulting, with the difference typically 10 percentage points or higher. 

Meanwhile, at the strategic consulting firms of McKinsey & Company, Boston Consulting Group (BCG) and Bain & Company, their domestic divisions now rank among their top performing country teams globally. BCG for instance saw its Australia and New Zealand revenue jump by over one third to nearly $400 million in its latest financial year. Today, the firm employs some 450 partners and staff. 

In the past seven years, Bain & Company nearly doubled in size by revenue and now has a team of nearly 40 partners and over 250 consultants. McKinsey & Company has also seen its footprint grow in the past years, and today the largest of the MBB trio in Australia houses a team of nearly 500 consultants and staff. 

Australian-origin management consultancies are equally doing good business. In the larger segment of the home-grown landscape, Nous Group, founded in 1999, and Partners in Performance, established in 1998, have grown their headcount to roughly 400 and 500 staff respectively. 

In the SME segment, the growing consulting landscape has offered dozens of boutique firms the ideal backdrop to thrive, and new players the occasion to nestle themselves among the established order. FMCG specialist Pollen Consulting Group and business consultancy State of Matter for instance both launched in 2016 and today have teams of around 25 consultants. 

Consulting industry sizes of major economies

M&A activity

The growing consulting market is lifting local deal activity to a high. Data from Consultancy.com.au shows that close to 30 significant deals have been closed since the start of this year in Australia’s consulting arena, with the Big Four not surprisingly taking the largest slice. Deloitte’s acquisition of Presence of IT (transfer of 600 staff, of which 300 in Australia) and KPMG’s pick up of Ferrier Hodgson being the most notable. 

Source Global Research’s forecast is however not all upbeat. In the case the likely outlook does materialise, the war for top talent will intensify, placing pressures on the recruitment and resourcing functions of consultancies. Risks include the growing number of independent consultants (often alumni of tier-one consultancies) equipped to do the job for lower fees, slowing GDP, and lower government consulting spend (accounts for 18% of total fees) – all of which could cool down Australia’s management consulting.


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