Strong growth for management consulting markets of GCC and India

12 December 2016 Consultancy.uk

The management consulting markets of the GCC and India have seen strong expansion last year, growing by 9% and 11% respectively.

Despite slumping oil prices, the consulting market of the Gulf Cooperation Council (GCC) – consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – performed well last year, growing 9.4% to $2.7 billion. The Big Four firms hold a strong stake in the region: 34% of the region’s consulting income in the top tier space* ($913 million) flowed into the pockets of Deloitte, EY, KPMG and PwC.

Although the growth rate of the region is impressive in comparison to other global consulting industries, it is a markedly lower than the region has been used to (25% in 2013 and 15% in 2014), according to data from analyst firm Source Global Research, mainly the result of the structurally low oil prices impacting the spending power of governments and large corporations.

Saudi Arabian consulting market

Saudi Arabia accounts for almost half of the GCC consulting market ($1.25 billion); the country was therefore instrumental in driving much of the region’s growth last year. Spending on consultants in the Kingdom is carried largely by the public sector – many of the country’s range of economic reform and diversification programmes, including a shift away from oil reliance and a massive investment agenda, are supported by (international) consultancies. Among the firms delivering high profile work are McKinsey & Company (the consultancy was for example hired by Deputy Crown Prince Mohammed bin Salman to support ‘Vision 2030’), The Boston Consulting Group (BCG), A.T. Kearney, Oliver Wyman and Strategy& – all of which have (rapidly expanding) offices in Saudi Arabia.

Size of the GCC Consulting Industry

The lucrative battleground for consultants in Saudi Arabia has however caught the eye of competition, with competition heating up, putting pressure on the supply versus demand equation and on prices / margins. In addition, the market is facing some anxiety, as the question is how long the Saudi government will maintain its big spending pattern against a backdrop of reduced oil revenues.

Saudi Arabia’s government isn’t alone in turning to consultants – across the GCC public sector institutions are embracing external support to advise on their respective issues. Total public sector advisory spend grew by nearly 12% last year, to $856 million. In comparison, the revenue of the healthcare, pharma and biotech industries– the region’s fastest-growing sectors – is just $174 million combined.

Other GCC advisory markets

GCC’s second largest GCC consulting market, the UAE, grew by 4.3% to $788 million. Qatar saw its consulting fee income rise by 6.6% to $329 million, Kuwait grew its advisory space by 3.7% to $183 million and Oman booked a solid 6.9% increase in market value to $100 million.

When it comes to service lines, technology was the fastest grower in the GCC, expanding by 12.2% to $895 million. Operational improvement enjoyed a 12% increase to $534 million.

Indian consulting market

The consulting industry of India managed to outperform the GCC last year, increasing 11% to $1.87 billion, on the back of, among others, strong growth in spending related to digitisation and government reforms, which have contributed to accelerated globalisation of the Indian market. In the face of increased competition from abroad, domestic companies are pressured to elevate their managerial and operational maturity, resulting in greater consulting demand, often aimed at improving competitiveness and professionalisation.

India also enjoyed a considerable increase in foreign direct investment (FDI) into the country last year, giving strategic and financial advisory consultancies increased opportunities to help multinational corporations (MNCs) navigate the market. The large, multinational consulting firms are increasingly helping Indian firms expand abroad, while foreign-based MNCs are eager to work with local firms to develop their India market-entry strategies.

Size of the Indian Consulting Industry

The financial services industry remains India’s market’s biggest buyer of consulting services by a substantial margin, growing 12.3% to $586 million in 2015, with digitisation and a flurry of new bank permits driving demand (new license presents an opportunity for lucrative consultancy work helping the new bank get on its feet).

In terms of functional work, technology is, also in India, the biggest consulting service line, at $852 million, followed by strategy, at $688 million.

Despite the rapid growth, consulting fees in India remain stalled at very low levels, making profitability tough in India. Firms are, according to the analysts, trying a number of approaches to ease the pressure, including focusing their efforts on winning the market’s most sophisticated projects, building stronger relationships with clients, and adjusting their models to allow them to deliver quality work at prices that clients will find more palatable while protecting their own margins. The Indian consulting market further faces a relatively large polarisation between segments, with high-value strategic work on one end and low-cost technology work on the other, while the middle ground is characterised by a large variance in project types and fees.

Looking ahead, the Indian consulting market is set to continue to see above average growth, with fortunes likely to go from (very) good to great if government reforms move at the pace envisaged by Prime Minister Modi and his policy makers.

With a total market size of $55 billion, the US is the globe’s largest consulting industry, followed by the DACH region and the United Kingdom.

* The estimates by Source look at the revenue of mid- and large-sized consulting firms (those with more than 50 consultants) and typically includes work they have carried out for mid- and large-sized clients. Taking into account the consulting activities of small consultancies and boutique, as well as freelancers, would lead to a much larger sizing.

More news on

×

Accenture's push into the creative sector is an identity crisis

18 April 2019 Consultancy.uk

In its latest push into the creative sector, Accenture Interactive acquired New York and London-based ad agency Droga5 earlier this month, adding illustrious clients such as HBO, Amazon and The New York Times to its roster of clients. With the latest in a long line of similar purchases, Accenture Interactive further demonstrated its ambition of becoming the globe’s leading trusted advisor to chief marketing officers. Yet according to Ben Langdon, Chairman of Class35, Accenture’s strategy may be heading in the wrong direction.

A press release on Accenture’s website announcing the acquisition sits next to a quote stating that “brands aren’t built through advertising” – a huge contradiction from a consultancy firm hell-bent on becoming the ‘CMO agency of choice’. It’s not alone of course. The entire consulting industry wants a piece of the creative pie right now. In addition to Accenture Interactive, recent acquisitions by PwC Digital, IBM iX, and Deloitte Digital meant that in 2017, for the first time ever, four of the world’s ten largest creative agencies were consultancies.

So just what it is that Accenture wants to achieve from this? For one thing, it’s clearly trying to be a digital transformation business. A one-stop creative shop rivalling more traditional models, it wants to lure CMOs in with the promise of lower ad spend and a “more impactful customer experience”. At the same time, though, it’s still in thrall to those same slinky, shiny branding and advertising agencies it’s attempting to disrupt. The Droga5 acquisition and that of Karmarama a few years before are both testament to this.

There’s a fundamental problem with this, though. Digital transformation businesses don’t sell to CMOs. These people have enough on their plates trying to transform their own marketing skills in order to keep up with an ever-changing market – they just don’t have the time or the energy to concern themselves with digitally transforming a whole business. If Accenture’s purpose is digital transformation, then going after creative agencies is barking up the wrong tree.Is Accenture's push into the creative sector an identity crisis?

Worlds apart

Perhaps more importantly, these two industries are worlds apart in terms of the way they think. Creative agencies are all about ideas, campaigns and consumers. Digital businesses, on the other hand, are customer-driven – they think in terms such as lifetime value, measurement, and efficiency. Customer-led thinking is an entirely different beast to consumer-led thinking.

The reality is that the arrival of digital and an all-encompassing obsession with technology, measurement and social has led to the death of agencies in a reductive, zero-sum, efficiency-focused battle with brands. Indeed, agencies have become so obsessed with the latest tech fads, they’re beginning to forget how brands work. Worse still, they’re beginning to forget how brands are built. And, by forgetting, they’re destroying their own values.

Killing creativity

All things considered, it really feels to me as though Accenture is a chip leader in a game it doesn’t understand. Expensive acquisitions like these show that they’ve got the big money, but they don’t appear to have any idea what they’re doing with it. Take talent, for example. The best talent in the creative industry right now is out in the market; it’s not tied to any one agency. Both agencies might well be at the top of their game, but why would a consulting firm waste so much money on buying them when they could hire high-quality creative talent on a contingent basis instead?

As their presence in the top 10 creative agencies shows, there is a growing trend in which Accenture, like many of the other big players, are buying up agencies as if they were nothing more than keywords. What they’re really buying, though, is a collection of credentials, clients and IP. Unfortunately, the talent that created those credentials aren’t going to stay at the business, the clients that hired the agency in the first place won’t be interested in buying what is basically just another part of Accenture, and the IP never really existed to begin with.

Droga5, for example, was one of the few agencies that did great brand work the old-fashioned way – undoubtedly something that made it attractive to Accenture in the first place. The irony, though, is that by leading it further away from the way of working that made it so special, the consulting giant will kill its creativity.

“Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record…. But, in flashing its cash, it is spending millions on acquiring nothing of any value.”

If pressed, the recently acquired agency staff at Accenture will tell you just how dysfunctional the new arrangement is. They’re largely unfulfilled. Rarely do they feel their work has any sort of meaning or purpose. What’s more, the different disciplines have found little or no common ground, and find it hard to work together as a cohesive whole. It’s not surprising, then, to see talented people leaving in droves.

Beyond the window dressing 

It’s clear, then, that consulting firms and creative agencies are no easy bedfellows. But in his company’s defence, Accenture Interactive’s Senior Managing Director for North America, Glen Hartman, described its culture as being “far, far away from what a stereotypical consulting firm would look like. Our office and studios look a lot like Droga5’s.”

In demonstrating a belief that office design equates to workplace culture, this statement serves as an illustration of how confused Accenture is right now. It wants to justify its new strategy so badly, it’s started dressing like a creative agency. But if you look beyond the window dressing and see that you and your partners are speaking a different language with a different purpose, selling to different people in a different market, there’s no getting away from the fact that you’re different.

Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record, and it wants to dazzle others with its new direction. But, in flashing its cash, it is spending millions on acquiring nothing of any value.

Related: Space between consulting firms and creative agencies is converging.