Australia's energy & resources consulting industry is 2nd largest globally

06 December 2018 Authored by Consultancy.com.au

Australia’s energy & resources consulting market has grown by 4.7% to over $US1 billion last year, meaning that Australia’s industry remains the second largest in the world, behind only the massive market of the United States.

The professional services market of Australia is facing a period of strong growth, with the management consulting sector at its forefront. According to one estimate, Australia’s management consulting market expanded by over 4% every year since 2014, with last year’s growth estimated at 7%, taking the value of the industry to around US$5 billion. 

Spending by clients in the energy & resources space amounted to just over $US1 billion in 2017, one fifth of all revenue generated by management consultants in Australia, with the energy industry trailing just the financial services sector in terms of spending (share of 23%). Globally, the energy & resources consulting market is worth $US15.5 billion, according to data sourced analyst firm from Source Global Research. Roughly half of all fees are gained in the US market – the globe’s largest market for consultants by a distance – however, Australia follows as the world’s 2nd largest market in the landscape.

Australias energy & resources consulting industry

Much of Australia’s leading global position in the energy & resources space builds on the massive role mining plays in its economy. According to the Minerals Council of Australia, resources comprise 15% to 20% of the national economy and up to 60% of Australia’s exports, with major players such as Melbourne-headquartered BHP Billiton (the fourth largest company by revenue in Australia) and Rio Tinto (revenue of $40 billion) playing a chief role in the industry. 

Beyond mining & resources, companies such as energy generators (e.g. AGL, Origin and EnergyAustralia), energy retailers (e.g. Alinta Energy, BlueNRG, Click Energy, etc) and other players in the value chain are increasing their spending on consultants as they navigate the growing need they face for change.

Within the energy & resources landscape, energy remains the largest consulting sub-market, with work in this field valued at $US465 million. Utilities is the smallest of the three defined sub-market, valued at $US270 million, while primary resources sits in between the two segments with consulting spending of $US323 billion. Mining companies are the biggest buyers of consulting services in the primary resources sector – they ramped up their advisory spend in 2017 on the back of improving commodity prices.

From a services perspective, much of the work clients are tapping consultants for lies in the fields of strategy ($US259 million) and operations ($US217 million). The largest service area however is technology ($US368 million) – amid a booming landscape for digitisation, management and IT consultants are brought on board to help clients with developing digital business models and bringing them to reality.

Size of the global energy & resources consulting market

Outlook for consultants

The outlook for Australia’s energy & resources consulting market is bright: an improved oil price means that energy companies are able to free up more funds to invest in efficiencies and innovation. Similarly, rising commodity prices is likely to improve margins across landscape, which is set to spur demand for external consultancy. At the same time, awareness on the importance of embracing emerging technologies as a means to achieve differentiation and competitive advantage has now settled in well in boardrooms, with the digital transformation agenda of CxO’s expected to lead the growth of consulting spending in 2019 and the years beyond.

Meanwhile, renewable energy – climate change policy is a key issue in the battle for the electorate and for realising the Paris Agreement objectives – is becoming a growth market to watch for Australian consultants. Politicians have set an economy-wide target of cutting emissions by 26% relative to 2005 levels by 2030, opening up avenues to all kinds of projects for which consultants will be needed, from the development of market reforms and strategic work, to supporting proofs of concept and the execution of large change programmes.

Related: Gravy train continues to flow for Australian consultants.

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