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Management and Marketing Consulting Market Faces Competition From In-house Specialists
Despite continuing financial and economic uncertainty impacting the global economy, management & marketing consulting continues to grow in 2011, with only Japan declining of the major markets.
The global market expanded by 6.2% in 2011, to reach a value of $301.1 billion, indicating a compound annual growth rate (CAGR) of 3.6% in the period 2007-2011.
Growth in this period was primarily driven by the Americas and the Middle East and Africa, who achieved the largest CAGRs in 2007-2011. The Americas contains the single largest consulting market, the United States, which has seen strong growth since the financial crisis started.
Although competition remains fierce among the larger companies, many smaller sized firms have endured the financial crisis relatively intact. This is due to their highly specialized nature, although these firms will come under pressure as economic uncertainty persists and well established companies with a strong brand look more viable.
The economic crisis continues to affect the management & marketing consulting industry, as its main customers remain under intense pressure. New investment remains unlikely as many firms consolidate their position, with firms being more cautious financially. Although risky new ventures are being declined, customers are laying the foundations for a possible upturn in the future. The European sovereign debt crisis also has affected a key source of revenue, the public sector, as governments almost unanimously adopt austerity policies, reducing revenues available to state owned enterprises.
As the US and European markets are still in a state of economic malaise, many firms are seeking new markets to capitalize on. Companies within particularly troubled economies, such as Spain, are now looking to internationalization as a source for growth. They are hoping to combine their consulting expertise with further knowledge in burgeoning markets, e.g. consumer markets in South America.
The management and marketing consulting market faces competition from in-house specialists, which may prove cheaper than the fees levied for a consulting firm’s services. As the slowdown progresses, firms already engaged in cost cutting following globalization will have to embark on further efficiency drives, which may mean delaying new consulting projects. Smaller firms however may compete by providing specialized industry or region specific information, as opposed to covering a vast expanse of industries and countries as the larger firms do.
The Americas were the largest segment in 2011, accounting for just over 50% of revenues. Europe was the second largest. The United States proved the largest in terms of value, with revenues totaling about $110 billion in 2011.
Segmentation varies depending on the region. Globally, operations management is the largest, information technology consists of over 20%, with corporate strategy being on the third place. Other segments include human resources management, which made up 12.1%, and other services provided, which formed 17.3%
The global market is forecast to accelerate growth with a CAGR of 6%. Key markets will grow robustly, with Europe growing at 5.9%, the Americas 7.2%. Asia-Pacific will contract by 0.1%. The Americas will remain the largest regional market, with Europe becoming the second the runner up.