The global technology, media and telecoms (TMT) consulting market has grown by 4% to roughly $5 billion, according to a recently released report. Growth though differs across the continents, with the US significantly outpacing the rest of the world.
In 2012 companies in the tech, media and/or telecoms space spent approximately $4.8 billion worldwide on management consultants, reveals data from analyst firm Source Information Services (Source). In 2013 the market grew by 4.1% to just under the $5 billion mark ($4.99 billion), which represents approximately 5% of the global consulting market. At a size of $24 billion, Financial Services is the largest segment within the industry, followed by the Public Sector and Energy & Resources. Within the TMT market there is substantial variation in regional performances. Outside of the US, which grew by 8.5%, the market is described as “tough”, with the rest of the world only growing by a measly 1.8%. The only bright spots outside the US were in relatively small emerging markets such as the GCC, West Africa, and East Africa, which grew by 11.3%, 35%, and 18% respectively.
Differences between segments
Although the tech, media and telecom sectors are typically combined into one ‘industry’ by consulting firms, the researchers highlight that market structures and consulting spend differs across the three sectors. In the case of telecoms, many markets are dominated by a tiny number of big players, says Alison Huntington, Senior Analyst at Source, hinting at the domination of the traditional players such as Accenture, Capgemini Consulting and the Big Four. “By contrast the media sector is often hugely fragmented and the challenge is about finding clients who are big enough to buy consulting in any meaningful volume”, Huntington explains.
The tech sector is characterised by a low propensity to spend on consultants, according to Huntington because “their success and in house expertise means they don’t need to.” As a result, many of the technology giants like Google, Facebook, and Apple don’t buy much consulting at all, preferring to recruit (former) advisors as their own employees. In addition, the pace of new developments in the high tech market is so high that consultants traditionally have a hard time staying ahead of – or even staying on par with – the industry.
From a functional perspective, the two most significant service areas in the TMT consulting market are operational improvement, valued at $1.69 billion, and technology at $1.59 billion. Together both segments represent two thirds of the market, with the remainder split across a suite of different services, ranging from strategy consultancy to change management and financial advisory. The majority of the work is around business model innovation: monetising products; digitising assets; reaching out to new or under-served customers; improving customer service; bundling services to increase their value; and reducing the time it takes to go to market.
Looking ahead the outlook is positive say the researchers, stating that nearly all the clients surveyed said they expect to take on growth initiatives in the 12 months ahead, a feat which will likely drive a substantial amount of consulting work throughout the year. Similar to other consultancy segments, Big Data represents a prime opportunity, primarily because clients lack the technological expertise required to develop a data strategy and analytical capabilities required to interpret massive amounts of data. “With the majority of TMT companies, telecoms in particular, having vast stores of data about their customers sitting untapped, there’s a real sense of urgency around how they can use this information to improve their customer relationships and be seen as more than a mere utility provider. Therefore, having the skills and knowledge that are needed to tap into this resource means consultants are perfectly placed to advise clients”, comments Huntington.