Fourth Quarter: Management Consulting Stats

The global management consulting industry, like many, had to adapt to new ways of working, consumer trends, and business needs during the Covid-19 Pandemic. In this post, we’ll analyze stats and trends from the fourth quarter, full-year, and overall industry.

Business Highlights and Trends

Let’s assess highlights and trends in the management consulting industry.

• Continued digital transformation. As with many industries, the management consulting sector saw accelerated digital transformation throughout 2020. Although rapid advances were made, many experts consider the sector still lags behind other sectors in automation and digitization. As reliance on new technology increases, it’s expected the industry will move from a per-hour model to a fixed-fee system. 
• Talent recruitment. As the industry hurtles towards a new, streamlined operating model, HR teams from a variety of businesses have a renewed focus on talent sourcing and onboarding. While degrees in a related field remain a requirement for entry-level jobs, new management consultants will also be expected to have strong digital soft skills to help with increased integration.
• Crowdsourcing talent. With the expansion of the “gig economy”, personal branding and social media platforms like Linkedin, freelance management consultants are now more accessible than ever. Businesses from a wide variety of industries are now engaging with independent consultants in a trend that’s been dubbed “crowdsourcing talent”. These freelance professionals are able to produce quick results for businesses with minimal costs.
• In 2020, there were more than 700,000 management consulting firms worldwide, providing a range of services in fields like IT, real estate finance, and healthcare.
• Use of big data. The use of data analysis and new technologies will continue to disrupt the management consulting industry into “modularization”, a trend whereby businesses engage management consultants in part, and not all, of the process. New technologies mean businesses now have greater visibility over the operations, removing the need for traditional management consulting.  You can read more about new trends in the industry here. 
• The average salary for a management consultant in the US in 2020 was $83,610 per year. This works out to be $40.20 per hour.

 Project Management Stats

• Bain & Company surveyed 1286 industry leaders to hear their thoughts on emerging trends. 66% of respondents agreed with the following statement: “digital disruptions and software solutions are rapidly changing the rules of competition”. This reflects the digital transformation trend seen in the consulting industry as a whole. Source.
• A survey by the Boston Consulting Group found that 80% of business leaders say they plan to accelerate digital transformation in their business following the crisis caused by the Covid-19 pandemic. In addition, 65%  of respondents claim they intend to invest even more in tech solutions despite the economic turndown. Source
• Consulting giant Accenture carried out a study into the use of data analytics in project management. While businesses are expected to have 10 times more data in 2025 than in 2017, 32% of companies are unable to carry out tangible and measure results from this data. Source
• A McKinsey & Company report on project management found that over 75% of the 300 respondents say their respective organizations plan to modernize their project delivery model. However, it also found 86% believed their company hasn’t done enough to update their project management models. Source 
• A survey by project management websites at 4 PM, found that on average 70% of projects in a business fail. It puts this down to poor project management practices and a lack of understanding of different methodologies. Source.
• The Project Management Institute recently published a report in which it found that 10p of every dollar spent on projects is wasted by businesses, totaling over $2 trillion globally each year. It claims poor organizational agility is one of the main reasons for wastage and unsuccessful project delivery. Source.

 Resource Management Stats

• Deloitte surveyed over 3,500 executives to get their thoughts on the top factors in making remote work sustainable. According to 39% of respondents, the most important factor is the “implementation and use of digital collaboration platforms”, followed by “personal choice in determining how the work gets done” (36%). Source.
• A far-reaching survey of over 3000 consulting professionals by Boston Consulting Group determined the three biggest trends in consulting firms’ resource management in 2021. The first is digitization, and how new technologies like AI will revolutionize business intelligence. Next is talent, and how businesses will strategically manage their workforce in the new normal. And the third is the future of work and agile resource management. Source
• A report by McKinsey & Company analyzed the effect the pandemic and remote working had on hiring and human resources management. It found that 67% of over 120 CEOs plan to spend less time on hiring permanent recruits, and 63% plan to grow their IT and tech teams in response to changing ways of working. Source.
• In a recent study of HR trends, 40% of HR teams plan to focus on organizational restructuring following the sweeping changes caused by the Coronavirus pandemic. While 40% also plan to invest in preparing their teams for an increasingly digital workspace. Source.
• The same study by Accenture found that 100% of HR teams see intelligent technology as a positive change in resource management that will enable agile and simple user experiences. But it found that only 23% of companies are ready for digitization. Source.
• Deloitte published a report in which it surveyed HR leaders from across the industry. The study concluded that using the data will revolutionize the way companies manage their people, but that only 23% felt they were correctly using this data. It added that Saas or “cloud” solutions will help teams better manage their HR data. Source.

 Financial Performance Stats

• The famous “Big 4” management consultancies (KPMG, Deloitte, EY, and PwC) are worth a combined $3.5 billion dollars and have enjoyed 11.5% growth. These 4 firms outperform others in the consulting services industry. Source.

• The management consulting industry globally is worth over $250 billion dollars, with the US and UK amongst the biggest markets. Further afield, Germany, Switzerland, and Austria are Europe’s top management consulting countries, with combined total revenue of €8.7 billion. Source. 

• Industry leader ICF saw total revenue of $434 million in the fourth quarter of 2020, with non-GAAP earnings per share (EPS) at $1.36. Despite the crisis caused by the Covid-19 pandemic, Q4 revenue was 9.5% higher than the same quarter in 2019. CEO John Wasson attributes this to sweeping IT modernization and public health demands caused by the Pandemic. Source

• In the US, federal government agencies made up some of the industry’s biggest clients. ICF saw 19% revenue growth from government clients, with income reaching $165.5 million. This represents 38% of the organization’s total revenue. A further $34.4 million came from overseas governments, representing 9% of the overall turnover. Source.

• Consulting giant Nasdaq recorded solid growth in the full year 2020, with total net revenue of $2.9 million, a 15% increase on 2019’s full-year revenue. The fourth quarter was particularly strong for Nasdaq, with total revenue reaching $788 million, a 22% increase on the equivalent period in 2019. Non-GAAP EPS finished at $6.29 for the full year and $1.34 for the fourth quarter. Nasdaq’s total liabilities for the fourth quarter finished at $8285. CFO Michael Ptasznik puts Nasdaq’s strong performance down to its solid cash flow of over $1 billion, allowing the business to invest in growth. Source.

•  As a whole, the management consulting industry in the US was worth over $55 billion in 2020, representing a 7.7% growth compared to the previous year. Globally, the industry was worth $819.7 billion in 2020. Western Europe represented 45% of the market, followed by the US at 29%. Source.

• Industry giant Accenture also had a strong fourth quarter and full-year financial performance, with a 10 point increase in profit margins (operating profit margin was 14.7%). Its free cash flow finished the full year at $7.6 billion, allowing the firm to further invest in growth. Its GAAP diluted EPS was $7.89, up 7% from the 2019 fiscal year. Shares provided a return of 23% for the full year. Source.

Market Size and Market Share Stats

• The Big 4 consulting firms ( PwC, Deloitte, EY, and KPMG) accounted for 37.4% of the market in 2018. The firms ranked as followed: Deloitte 10.9%, PwC 10.1%, EY 9.3%, KPMG 7.1%, Accenture 5.5%, McKinsey and Company 4.9%, Boston Consulting Group 3.4%. Source
• In Europe, the UK has the largest share of the management consulting market but is expected to be challenged by Germany, Austria, and Switzerland. These three countries have seen their market share increase in recent years and could overtake the UK. Source.
• New York-based Nasdaq recorded strong market share growth in the Nordic countries, reaching 79% of the management consulting industry in the fourth quarter of 2020. For the full year, it posted a similar figure with a 78% market share, a decade-high for the firm. Source. 
• Firms that specialize in IT consulting services have seen the biggest growth in recent years, as digital transformation continues to take center stage, representing a 9% share of the industry’s overall revenues.
• Despite many of the industry’s big players reporting large advances, the overall market size decreased by 12.5% in 2020, largely due to the coronavirus-led economic downturn. 

 Revenue Stats

•  Consulting giant Accenture saw revenue depreciation of 2% in the fourth quarter. Full-year net income finished at $44.3 billion, seeing 3% revenue growth in US dollars. CEO, Julie Sweet, claims “We continued to deliver revenue growth ahead of the market as well as strong profitability and superior cash flow”. Source 
• Deloitte enjoyed a 5.5% revenue growth in the fourth quarter, one of the strongest in the financial services industry. Its full-year revenue sits at $47.6 billion. Punit Renjen, Deloitte Global CEO said “FY2020 has been a tale of two halves. In the first part of the year, we were serving our clients, people, and communities as normal, then the COVID-19 pandemic struck, bringing with it a level of global disruption we’ve rarely seen in our 175-year history,” Source
•  One of the world’s largest firms in the consulting market, Boston Consulting Group, posted global revenue of $8.6 billion, representing an 8% increase, although down on the 14% growth experienced in the same period in 2019. BCG’s CEO, Rich Lesser said “In an exceptionally challenging global economy, BCG adapted, remained agile, and continued to put our clients first”. Source.
• McKinsey and Company recorded strong financial performance in the full year 2021, with strong balance sheets recording $10.5 billion. Source.
• In their financial statement, management consulting firm Bain and Company posted total full-year revenue of $4.3 billion. Source
• The management consulting industry as a whole experienced negative revenue growth in 2020 vs the same period in 2019. Analysts largely expect a rebound in the rest of the financial year and into 2022 as the world recovers from the pandemic. It’s expected the tech and healthcare industries will provide the biggest boost to the industry. Source.