Stellar year for Boston Consulting Group Australia and New Zealand
Boston Consulting Group (BCG) looks back at a stellar year in Australia, with revenues up by over one third to nearly $400 million.
According to Anthony Roediger, BCG’s Managing Partner for the Australia & New Zealand region, the consulting firm benefited from growing business across its entire business. “Growth was strong across all our practice areas last year, where usually there is some cyclicality, or a portfolio of slower and faster-growing areas that balance each other out,” he said in discussion with AFR.
Roediger has been with Boston Consulting Group – the globe’s second largest strategy consulting firm after arch rival McKinsey & Company – since 2000, working across many different industries, including infrastructure, transportation, energy, media and communications, education, health, social services, housing and government. Roediger specialises in strategy and governance, business and operating models, organisation, large-scale change and programme management, and has completed several engagements outside of Australia in Asia, the Middle East and Europe.
Documents filed with the corporate regulator show that BCG’s local revenues grew by 34% – circa five times more than the growth rate of Australia’s management consulting market – from $292 million to $395 million. Because expenses grew by a lower amount, up $67 million to $332 million, profit jumped 130% to $43 million, more than double the previous year's.
This bottom-line profit however excludes bonus partner payments of $58 million (recorded as management fee in its filing), which is charged by BCG’s holding in the US (where the consultancy is headquartered) to BCG Australia and New Zealand to cover the firm’s equity programme for partners globally.
The remarkable 34% growth makes BCG Australia and New Zealand one of the firm’s star performers across its 80+ office network. In its latest financial year, the consultancy booked global sales of $7.5 billion, on the back of 19% growth at constant exchange rates. The firm, founded in 1963 in Boston, Massachusetts by Bruce Henderson, employs more than 18,500 employees, of which an estimated 450 are based across its offices in Sydney, Melbourne, Canberra, Perth, and Wellington. The local team is led by 44 partners, of which 11 are women.
BCG’s bumper results come after a few poor years in the slipstream of the global financial crisis. Between horror year 2013 (when revenue dropped by 40%) and 2016, the strategy consulting firm booked three consecutive years of losses. Andrew Clark, BCG's former managing partner for the region, managed to turn the tide in 2016, and since then, BCG has only been going up.
Digital is not surprising a key driver of growth – BCG is helping both private sector and public organisations with unlocking the value of digitisation for business models and operations. Globally, roughly one-third of BCG’s revenues now has a substantial digital component, according to BCG’s chief executive Rich Lesser, who is in his third term in office.
Meanwhile, BCG Australia and New Zealand has aggressively pushed into adjacent segments of the consulting industry. BCG Digital Ventures, the firm’s incubation and investment arm, originally launched in Australia in 2014, and having grown its international footprint to eight offices, the Australian arm still is one of the most mature units. BCG Gamma – a subsidiary that focuses on data science – is now 60-strong in Australia, after acquiring The Simulation Group earlier this year.
BCG first touched down in Australia and New Zealand in 1990, following a merger with Pappas, Carter, Evans and Koop.
Comparing the MBB?
Comparing BCG’s performance with that of main competitors McKinsey & Company and Bain & Company is notoriously difficult anywhere in the world, with all three privately-held companies using a mix of accounting measures that are not directly comparable and include transfers to different offices. Further, all three companies systematically refuse to comment on any specifics around finances nor operations, as well as on client engagements.
According to data from Consultancy.org, McKinsey is with nearly 500 staff the largest of the trio in Australia, with BCG hot on its heels, and the two leading Bain & Company by a margin of some 100-150 employees.
