Federal government spend on big 7 consulting firms tops $1 billion

The world’s seven biggest and most prestigious consulting firms have cashed in on the federal government’s economic recovery efforts, collectively scoring over $1 billion in contracts last year.

Australian federal government spending on consulting services among generally the world’s seven biggest firms – the so-called Big Four of Deloitte, PwC, EY and KPMG together with tech-minded professional services giant Accenture and global strategy kings McKinsey & Company and Boston Consulting Group – last year easily eclipsed the $1 billion dollar mark for the first time, rising from under $980 million in 2019 to around $1.2 billion in local tax-payer outlay for 2020.

All in all, the Big Four and Accenture have bagged federal contracts over the past 24 months worth in excess of $1.4 billion across consulting and professional services, while both McKinsey and BCG have doubled their recent government revenues. This is keeping in mind that such figures relate to federal spending alone (with state consulting budgets also through the roof), and doesn’t account for other large consulting firms or engineering and legal advisories such as AECOM and Clayton Utz.

In an all-too familiar story, the corresponding combined revenue number among the seven largest consultancy beneficiaries under the final year of the Gillard/Rudd Labor government in 2013 was less than $400 million. Since then, Australia’s management consulting market – now the fourth largest in the world and the most lucrative per capita – has grown to a total worth of more than $6 billion per annum – with the global Covid-19 pandemic only seeming to further accelerate its growth.

While the exact figures remain somewhat sketchy – the data here relies on the total contract value that has been registered with a ‘consultancy code’ in AusTender, where on occasion consulting contracts are awarded outside of the official tender process or misleadingly labelled.

The world’s two largest strategy consulting firms, McKinsey and BCG, appear to be the greatest beneficiaries of the federal government’s recent largess, each more than doubling their 2019 take.

According to Consultancy.org sums, supported by a recent investigation by InnovationAus, BCG has increased its federal government revenues more than once over on the back of work on Morrison’s gas-fired recovery and millions of dollars worth of projects for the national Digital Transformation Agency – including on the CovidSafe app – while McKinsey has boosted its haul by a staggering near 180 percent, up from roughly $18 million in 2019 to around $50 million last year.

Aside from Australia’s largest professional services firm – PwC, which already pulls in national fees of around $2.6 billion – the remaining Big Four and Accenture have also capitalised on the government’s generous recovery spending initiatives, with Deloitte leading the charge through an almost 40 percent uptick in federal contracts, and KPMG and Accenture landing roughly $250 million and $350 million each worth last year. EY also raised its federal government revenue by a third.