Management consulting, often referred to as business consulting, is defined as “advisory and/or implementation services to the (senior) management of organisations with the aim of improving the effectiveness of their business strategy, organisational performance and operational processes”. Management consulting is – due to the great diversity in disciplines and differences in required capacities of advisors – the broadest area within the consulting industry, and covers between 50% - 55% of the total consulting market.
Management consulting market
The worldwide market for management consulting services is estimated to be worth more than $130 billion, and represents just over half of the total global consulting market. In the past years, expenditures on management consultancy grew on average with more than 4% per year, although the percentages have in the the past years, in line with the economic recovery of mature markets, been picking up. With a value of $70 billion, operations consulting forms the biggest segment within the sector, while HR consulting and strategy consulting are more or less the same in size with a value of just over $30 billion.
The typology used by Consultancy.uk defines management consulting as the sum of three service areas. Strategy consulting, the segment that focusses on strategic and board room advisory; operations consulting, which focusses on improving the management of organisations; and HR consulting, a segment that centers around human capital advisory and/or consulting services aimed at improving the results of the HR function.
What does a management consultant do?
Management consultants are hired by decision makers for advise on, among others, strategy and organisational matters. They can be asked to develop a new strategic plan to, for instance, realise more growth, or commissioned to advise on innovation or cost reduction strategies. Implementing the proposed solutions also belongs to their tasks, and in practice the execution side of consulting forms the largest market for management consultants. Assignments can vary from improving the efficiency of business processes, the implementation of new IT systems, outsourcing of non-core tasks or optimising the supply chain. Management consultants typically remain involved until change transitions are complete and new ways of working have become part of 'business as usual' operations.
Management consulting firms
Since management consulting represents over half of the consulting industry, most players in the market are either specialised management consultancy firms or organisations with a business unit that offers management consulting services. In the case of the latter, it mostly concerns large IT service providers (who often provide implementation support and change management), recruitment firms (that often extend their recruiting and interim services with HR advisory) or temporary employment agencies (who add upscale consulting services to their temp and contracting portfolio). In terms of numbers, a large part of the market consists of freelancers – freelance management consultants that are active as independent advisors or contractors.