BCG’s ANZ team bouncing back from double-digit pandemic hit
Following a reported double-digit drop in revenues during the pandemic-hit 2020, Boston Consulting Group’s Australian team is bouncing back – with its fee income for the first half of this year higher than both last year as well as its pre-corona level.
Founded in 1963 in the US, Boston Consulting Group (BCG) is one of the world’s largest top-tier management consulting firms, renowned for its expertise in strategy. The firm’s strategy consulting arm advises CEOs, senior leaders and government officials on some of the world’s most pressing strategic challenges.
Globally, the member of the MBB (an acronym used to describe the world’s three largest strategy consulting firms; McKinsey, BCG and Bain) has come through coronayear 2020 remarkably well, booking 8% growth at constant rates, lifting its global revenues to US$8.6 billion.
“In an exceptionally challenging global economy, BCG adapted, remained agile, and continued to put our clients first,” said CEO Rich Lesser, who has been at the reins of the firm since 2013 (revenues back then were US$4 billion) and will pass on the baton the German Christoph Schweizer on October 1, 2021, having completed the maximum of three terms in the office.
However, according to reporting from AFR, Boston Consulting Group’s business in Australia and New Zealand was among the poorer performing regional business units with the group. As client paused or cancelled work due to the Covid-19 pandemic, revenue of the domestic wing fell by 11% to AU$279 million for the 2020 calendar year, down from AU$313 million the year previous.
A BCG spokeswoman told the financial newspaper: “Overall revenue was impacted by disrupted projects and lockdowns throughout [the March quarter] and [the July quarter] but resumed to normal strong levels by [the October quarter] as clients pushed forward with their respective agendas.”
Meanwhile, several other metrics deteriorated as well. Profit for example fell by almost half to AU$10 million in 2020, down from AU$19 million in 2019, despite the firm saving significantly on “travel and entertainment” expenditures (down 80% to AU$8 million) due to travel and physical contact restrictions.
Financials: shrouded in secrecy
However, despite the fact that BCG’s discloses some financials in local filings (arch rival McKinsey for example doesn’t divulge anything at all, or makes the filings in some countries so complex that little can be drawn out of them), it should be noted that the numbers in many cases don’t disclose the full picture of business performance.
A privately-held firm led by equity partners, BCG has several multi-year and cross-border financial mechanisms that are used to, among others, fund global or regional internal investments, transfer price fees for cross-border projects, pay out liabilities, or invest in external deals and ventures. These flows in financials are difficult to trace back to single offices, and distort the view provided by single financial year reporting.
In BCG’s case, Australia is one example. Between 2017 and 2018, filings show that ANZ revenues increased by 35% to $AU395 million. Then, in 2019, a year in which BCG booked solid results, revenue in the books fell to AU$313 million (21%). Despite this, a former BCG managing director and partner suggested to Consultancy.org that ANZ’s 2019 year was a “better year than the numbers show.”
Similar examples of misalignment between actual performance and financial reporting has been seen elsewhere across other BCG offices in recent years, with Consultancy.org previously reporting on such cases in France, the Netherlands and China/Hong Kong.
Bouncing back
Clear is however that BCG’s domestic outfit is bouncing back strongly from the past year, the spokeswomen confirmed: “We have started 2021 in good shape, growing strongly over both our 2020 and 2019 results, tracking over 20 per cent up on last year. Clients are looking to significantly upgrade their business models and integrate many of the learnings that have come from adapting to Covid-19.”
Key drivers of growth include corporate strategy work at corporates, continued support of major transformation within the government, booming demand for data analytics and digital services (“60% of our work now has a digital or analytics component”), and net-zero and sustainability work.
