Australian management consulting market grows to $4.6 billion

09 October 2017 6 min. read

Australia’s consulting market grew by more than 5% to a value of $4.6 billion last year. In line with global trends, the growth is thought to have been driven by a strong economy, renewed client focus on growth, and a healthy appetite for digital projects.

According to Source Global Research, an analyst firm for the consulting industry, the total fee income of the Australian management consulting market in 2016 grew 5.2%, faster than in 2015 and more than in 2014.

Thanks to the ramping up of technology-enabled efficiency work, healthcare was the fastest growing consulting market sector in the country. Retaining its dominance from the previous year, financial services (FS), was the largest sector in Australia by some margin, bringing in roughly $1.1 billion in revenues –also one of the fastest growing sectors, resulting partly from both changing regulatory work and boosted demand for support around digital transformation. Before this period of change, the energy & resources sector had been Australia’s biggest buyer of consulting services. However, the FS industry overtook it in 2015, growing 6.8% to hit $1 billion for the first time. This industry now comprises almost a quarter of the Australian consulting market.

Australian management consulting marketPublic sector consulting uptake was another outstanding area of performance, with current Prime Minister Malcolm Turnbull’s reform agenda seeing governmental spending on external expertise rise 8.2% to $845 million. This agenda has seen digital adoption become an important driver across both government and the education sector. The Australian government’s spending on consulting has not been without its detractors though. Earlier in the year, Turnbull – a former lawyer, merchant banker, and venture capitalist – and his administration came under fire for a A$5 billion consultancy bill (spanning several years), along with accusations that former ministers had breached protocol by taking roles in the professional services world.

Despite this volatile political environment, however, public sector clients are continuing to make headway on reforms, with consultants wasting no time in entrenching themselves in larger programmes of work – including the overhaul of Australian universities, who are keen to use digital facilities to improve their channels to market themselves. Such educational institutions are keen to capitalise on high levels of interest from abroad, with the lucrative international student market opening up thanks to a variety of factors in the UK and US, homes of the most prestigious universities. State governments, separated by vast distances, are meanwhile looking to connect to improve efficiency via centralised digital and cloud technologies – the implementation of which also benefits consultants.

Service offerings

In terms of services, cybersecurity was a factor of key interest according to Source’s statistics. The fear of potential breaches of sensitive information via hacking has come to the fore of many businesses over the past few years. High profile hacks such as the precursors of the global WannaCry cyberattack drove demand across numerous service lines over the past year and grew to a value of $899 million in 2016. The researchers, meanwhile, stated in their findings that the increase in cybersecurity work has been so intense in the past year that consulting firms reported having maxed out pipelines in this space. How this demand evolves over the coming year remains to be seen – with the news that the industry’s most dominant consultancy, Deloitte, had been hacked itself, potentially opening up new opportunities for mid-market competitors. 

The Australian consulting industry

Technological consulting subsequently remains one of the largest services in Australia’s consulting sector, with a value of over $1.3 billion. In line with a global trend which has seen the segment boom in the UK, France and Spain among others, clients are now looking for support on a large range of initiatives, with the leveraging of digital, ERP, agile, and cloud all offering consultants a steady stream of work. The improvement of technology infrastructure across Australia’s states has supported this, while another global trend of growing interest in AI and robotics, partly to undercut labour costs, has also seen employers draft in advisors. In 2015, technology recorded 5.8% growth to $1.37 billion, and became one of the fastest expanding consulting service lines in the country.

Digital outlook

Mirroring another international trend, albeit slightly later than other developed consulting economies, digital finally became major business for Australian consultants. Work focusing on the customer, helping drive strong interest in data and analytics was at the core of a number of private and public transformations over the last year. Digitisation of government services, both to streamline processes and cut costs as well as to provide more user-friendly interfaces for citizens, drove a large portion of demand for public consulting work. In particular, the establishment of the Digital Transformation Agency in 2015 has begun leading to new initiatives, while local governments have likewise echoed this focus on online citizen experience.

Edward Haigh, Director at Source Global Research said, “The broad consensus among consultants is that Australian companies are ahead of the global average in terms of their adoption of digital; behind the US, some parts of Northern Europe, and the mature Asian markets, but ahead of everywhere else. The impact of digital has also extended into consulting firms, with firms automating jobs internally and changing their approach to client issues.”

While 2017 is proving to be another year of healthy market growth, digital and technological demand are likely to see consulting in Australia remain in relatively high demand, according to estimates from Source. As clients continue to grow the top line using digital and transformation initiatives to accomplish their goals in the most efficient way possible, hopes remain high for 2018 as well, with Zoë Stumpf, Head Analyst at Source Global Research, stating, “we expect to see continued good levels of growth looking forward.”

Related: UK consulting industry grows by 5% to £9 billion, but faces challenges.