Digital transformation consulting market accelerates to $44 billion
The global digital transformation market has almost doubled in size over the past 18 months. According to the most recent figures available, revenues of the consulting service line have increased by more than $20 billion since 2016.
While the service offered by consultants to assist clients with their digital transformation is still a relatively new aspect of the industry, efforts to integrate new, innovative technology with business operations have become so essential to the survival of modern businesses that it is one of the most talked-about aspects of consultancy today. Last year it was found that the global digital transformation market accounted for £2.26 billion of the UK’s consulting market, then worth £7.31 billion. The trend was repeated round the globe, with digital transformation consulting taking off in the USA and Australia in a big way – rapidly breaching the 20% mark of both respective markets.
To say that since then digital transformation consulting has boomed would be an understatement. According to the latest data, the market has grown to $44 billion, almost doubling in size since mid-2016, when it stood at $23 billion. As the need to digitise remains at the top of the agenda for most large businesses, keen to fight off challenges from new digitally savvy competitors, the market is only expected to continue on its exponential growth trajectory, and presents a major opportunity for consultants to grow their revenues in years to come.
The trend presents a notable opportunity for the largest management consultancies, first and foremost. Due to their multidisciplinary nature, firms including the Big Four of PwC, Deloitte, KPMG and EY, host talents of all shapes and sizes, as well as compartmental teams necessary to oversee a digitalisation process successfully from start to finish. As digital transformation plans require breadth of consulting services to be truly transformational, it’s particularly big news for big firms – something which if anything boosts the concept’s notoriety as a result, as smaller firms looking to emulate top consultancies follow suit.
Top strategy firms also stand to benefit from digital transformation in a major way – as they are well positioned to help clients anticipate the potential pitfalls and shortcomings of projects, while building innovative technology into a business plan, rather than digitising for digitisation’s sake. Top strategy firms McKinsey & Company, Bain & Company and BCG (known collectively as the MBB) have each invested heavily in their digital lines in anticipation of this.
Opportunity for mid-tier firms
According to a recent poll by Source Global Research among consulting industry clients, however, the trend does not freeze out smaller players either. Businesses tend to speak very positively about mid-sized strategy firms’ digital transformation capabilities. According to the study, mid-market competitors are not being left out of the action either, with the likes of L.E.K. and A.T. Kearney sitting alongside much bigger firms when it comes to the quality of their digital transformation work, despite their breadth of digital services rarely being as wide as the biggest firms. The flexibility and nimbleness of mid-sized strategy players compared with their larger peers was considered a major selling-point by clients polled.
This is to some extent because of changing client behaviour, driven by cost-pressures. In the past, mega IT projects were engaged as bigger was often assumed to be better. Now firms are keen to seek more cost-effective, agile strategies amid an uncertain economic environment in the UK and US particularly, prompting clients to focus on value for money. While digital transformation is indeed big, some clients want to attack it in smaller chunks. Pilots, proof of concepts, and rapid prototyping in small engagements is increasingly popular – in part because some clients are also unwilling to place responsibility for such a key business aspect in the hands of one firm – with companies moving toward larger overall aspirations of a digital transformation via small, quick steps, handing smaller, more agile consultancies an inherent advantage.
Related: Consultancy.uk ranked a top 100 news publication on digital transformation.
