L7856 Management Consultants in Australia Industry Report

Ready for the bounce: After enduring cutbacks,
the industry prepares to capitalise on the global

economic recovery
IBISWorld Industry Report L7856

Management Consultants in Australia
September 2010 Sam Ellis
2 About this Industry 20 Competitive Landscape 36 Key Statistics

2 Industry Definition 20 Market Share Concentration 36 Industry Data
2 Main Activities 20 Key Success Factors 36 Annual Change
2 Similar Industries 21 Cost Structure Benchmarks 36 Key Ratios
2 Additional Resources 22 Basis of Competition 37 Historical Performance
23 Barriers to Entry
3 Industry at a Glance 24 Industry Globalisation 38 Jargon & Glossary
4 Industry Performance 26 Major Companies

4 Executive Summary 26 Accenture Australia Holdings Pty Ltd
4 Key External Drivers 28 Deloitte Touche Tohmatsu
5 Current Performance 28 Marsh Mercer Holdings (Australia) Pty
8 Industry Outlook Ltd
11 Industry Life Cycle 29 Boston Consulting Group Pty Ltd
13 Products & Markets 32 Operating Conditions

13 Supply Chain 32 Structural Risk Index
13 Products & Services 32 Investment Requirements
14 Demand Determinants 34 Technology & Systems
15 Major Markets 34 Industry Volatility
16 International Trade 35 Regulation & Policy
17 Business Locations 35 Industry Assistance

35 Taxation Issues
www.ibisworld.com.au | (03) 9655 3881 | info@ibisworld.com

www.ibisworld.com.au Management Consultants in Australia September 2010 2
About this Industry
Industry Definition This industry provides advice and human resource policies. This industry
assistance to businesses and other does not contain information technology
organisations on management issues, or computer consultancy and accounting
such as strategic and organisational firms, which significantly lowers
planning, financial planning and revenue and establishment estimates
budgeting, marketing objectives and from other sources.
Main Activities The primary activities of this industry are

Management consultancy services
Business planning
Strategic planning services
Statistical analysis
Business research
General consultancy services
The major products and services in this industry are

Financial business management services
General business management consulting services
Human resource management consulting services
Market research services
Marketing management consulting services
Other management consulting services
Production management
Similar Industries L7823 Engineering Consultancy Services in Australia

Firms in this industry consult on the design and construction of new buildings or infrastructure.
L7834 Computer Consultancy Services in Australia

IT consulting companies consult on computers and find themselves competing with management
consultants.
L7861 Employment Placement Services in Australia

Companies in this industry provide permanent employment placement and human resources planning.
L7862 Temporary Staff Services in Australia

Temporary staff services companies provide temporary and contract employment placement services.
Additional Resources For additional information on this industry

www.abs.gov.au
Australian Bureau of Statistics
www.imc.org.au
Australian Institute of Management Consultants
Industry at a Glance
Management Consultants in 2010
Key Statistics Revenue Annual Growth 06-11 Annual Growth 11-16

Snapshot
$7.1bn 2.0% 4.8%
Profit Wages Businesses
$708.1m $3.9bn 4,702

Revenue vs. employment growth Capital expenditure by the private sector
Market Share
Accenture Australia 10 18.0
Holdings Pty Ltd
8
4.9% 13.5
6
Marsh Mercer
% change
% change
Holdings (Australia) 4 9.0
Pty Ltd 3.6% 2

4.5
Deloitte Touche 0
Tohmatsu 3.1%
−2 0.0
Boston Consulting Year 02 04 06 08 10 12 14 16 Year 04 06 08 10 12 14 16
Group Pty Ltd 1.7% Revenue Employment

SOURCE: WWW.IBISWORLD.COM.AU
p. 26
Business locations
Key External Drivers 3.8%1.2%

Capital expenditure 5.4% TAS
ACT 0.5%
SA NT
by the private sector
Pervasive outsourcing 9.3%
WA
for financial functions
Business outsourcing
in the public sector 37.7%
NSW
Globalisation of business
management services
Number of businesses
13.9%
QLD
p. 4 28.2%
VIC SOURCE: WWW.IBISWORLD.COM.AU
Industry Structure Life Cycle Stage Mature Regulation Level Light

Revenue Volatility Low Technology Change Low
Investment Requirements Low Barriers to Entry Low
Industry Assistance None Industry Globalisation Low
Concentration Level Low Competition Level High
For additional statistics and time series see the appendix on page 36
Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive The appeal of management consultants to outsourcing. The challenge for

Summary the corporate world has been steadily management consultants is to capitalise
increasing for some time. The cost-saving on this.
benefits of bringing in outside expertise to As such, management consultants are
advise on and oversee change in a expected to post average revenue growth
company are widely known, and are now of 2.0% per year for the five years
widely recognised. The success of many of through 2010-11. This includes growth
the industry’s biggest names has only in 2009-10 of 1.2%, bucking an adverse
added to an already impressive reputation. trend being experienced in other white-
However, the ongoing turmoil on global collar industries. This comes, however,
financial markets and the prospect of hard on the heels of a contraction of
global recession is causing trauma for 0.2% in 2008-09, as business spending
many industries, and consultancies are not on non-core services contracted. That
immune. Major professional organisations the contraction was not more severe is
are shying away from large investments, as testimony to the resilience of
they attempt to limit the damage they may consultants during a downturn, and the
face as the world economy slows. corporate world’s increased reliance on
them for advice.
Smaller consultancies with a focus on
The
recovery is expected to be characterised by niche service provision are more likely to
suffer over the short term than are the
a sharp increase in business outsourcing industry’s biggest players. More common
consultancy practices are expected to
The industry’s greatest strength is its continue, while highly specialised
in-built stability. When the economy is services are expected to be deferred until
booming, customers are flush with profit more optimistic economic times. During
and are looking to invest in advisory this time, the bigger firms are expected to
services to increase margins further. consolidate aggressively, buying out
When things take a turn for the worse, smaller competitors who were unable to
many clients look for help in minimising weather the economic storm.
any potential damage. After this period of uncertainty, the
Certainly, in the Australian market, industry is set to rebound strongly, as
consultants have performed better than clients attempt to put procedures and
their international counterparts, as the systems in place to prevent their
financial sector – the industry’s largest exposure to future downturns of this
client – experienced a catastrophic nature. Growth is set to be 4.8% per year
decline. Early hesitancy led to sluggish to 2015-16, as a surge in outsourced
growth, but the recovery is expected to be advising from 2011 to 2013 drives the
characterised by a sharp increase in industry even further forward.
Key External Drivers Capital expenditure by private sector Pervasive outsourcing for
When capital expenditure by the private financial functions
sector is considered a proxy for the Attempts by governments and businesses
general level of confidence among to concentrate on their core strengths
businesses, it serves as a key indicator and functions, and lower staff and
of the performance of management associated overheads, has had them move
consultants. As business confidence and towards outsourcing (or buying in)
profits rise, the capacity and desire to expertise from specialist firms. This can
bring in external experts to advise on either replace or supplement some of the
expansion or restructuring plans in-house resources and functions.
become greater.
Key External Drivers Business outsourcing in the public sector at ensuring greater efficiency
continued Government is an increasingly common
user of outsourced services – any Globalisation of business
sporadic work conducted by government management services
offices can be limited by bringing in Global operation of major corporations
contracted staff. In the case of has led to a demand for globally linked
management consultants, government companies in this industry.
policy- and decision-making is made
easier if relevant research has been Number of businesses
conducted by an impartial third party. The number of businesses, and particularly
Also, internal reviews of operations and new medium and large ones, increases the
procedures are regularly outsourced to demand for consultancy services, much of
consultants, as their impartiality is aimed which has now been outsourced.
Capital expenditure by the private sector Number of businesses
18.0 6.75
5.75
13.5
4.75
% change
% change
9.0 3.75
2.75
4.5
1.75
0.0 0.75
Year 04 06 08 10 12 14 16 Year 03 05 07 09 11 13 15
Current Throughout the international economic

downturn, nervous corporate players
advisory nature – they can advise on
cost-cutting, for instance – they certainly
Performance demonstrated a profound unwillingness did not emerge unscathed. While
to spend money. As financial markets Australia’s management consultants
collapsed and the resulting credit outperformed their US and European
tightening filtered through to turn into a counterparts, the industry still
general economic malaise, companies cut experienced its first contraction since the
costs and protected bottom lines more early 1990s, experiencing a 0.2% drop in
fiercely. While management consultants 2008-09, when business confidence was
are protected from this by virtue of their at its worst.
Still standing The industry’s robust profit margins in offerings to more simplified services for
the past offered a substantial buffer struggling clients in 2009, after
against the slowdown experienced as spending many years providing more
clients tightened their budgets. The complicated business solutions to aid in
industry has routinely exhibited double- growth. The cost of retaining skilled
digit profit margins, and these were cut employees whose skills may not have
to around 8.0% of revenue in 2009. translated to a recession environment
Many consultancies adjusted their also ate into margins.
Still standing Over the five years through 2010-11, strategy planning
continued real industry revenue is expected to However, while the big firms have
increase to $7.08 billion, at an average been strong over the past few years, the
real rate of 2.0% per year. While the number of small firms in the industry has
previous two years were weak due to a increased. Many consultancies have
decrease in business spending, this trimmed staff, or focused on employing
appears to be only a momentary blip as consultants with expertise in change
stronger growth is set to resume in the management, meaning many specialists
coming year. Business confidence, while found themselves unemployed. It appears
not surging, is set to grow steadily as that many of these consultants started
economic signs become more positive. their own small firms (using existing
Larger firms were able to weather the contacts) as a means to ride out the
downturn by tailoring their services to current downturn. Despite slow revenue
clients’ needs, however small growth the number of consultancies in
consultancies (due to their niche the industry is estimated to have
operating nature) were without the increased by 2.6% in 2008-09 and 2.4%
necessary skills to assist with downsizing in 2009-10.
Consulting Talented staff are getting lured overseas

consolidation by higher wages and greater opportunities Industrysalaries have
and the industry has responded by
increasing salaries to retain quality increased to stop staff from
employees. As the number of smaller leaving for overseas jobs
industry players falls (many of which are
founded by highly experienced former
employees of medium to large firms), in the industry is lower than the number
many of the founders are returning to the of consultants thought to be operating in
firms that originally employed them or to Australia. This is primarily due to many
their competitors. This is likely to raise of these consultants being engaged in
wages for the industry. other forms of consultancy, such as
This shift to fragmentation and then recruitment, public relations and
back to concentration is currently information technology. There is also a
underway. However, in the meantime large number of consultants in the
wages have taken a severe hit. The industry employed by groups that require
downturn has seen contractions in consultancy on a regular basis. The most
average establishment size in terms of obvious of these is political parties and
employees, the average wage has fallen politicians, who employ full-time
commensurately and small low-earning advisors and consultants.
firms have become more common. The It is also likely that firms will establish
longer-term trend for the industry, strategic alliances with other firms in order
however, is one of ongoing consolidation. to gain access to specialist skills as they are
The effort to attract market share in a needed, rather than trying to have all of
highly competitive environment is these skills in-house. One of the largest
pushing large consultancies to offer a changes in the industry over the past five
broader array of specialities and offer years has been the re-emergence of the Big
implementation and oversight services Four auditors in the consulting sector. In
rather than traditional advisory services. 2000 and 2001, in the wake of the Enron
This has resulted in the acquisition of collapse and Arthur Anderson’s near-
small boutique consultancies demise, many major auditors divested
The number of individuals employed themselves of their consulting arms.
Consulting KPMG sold its consulting operations become more interested in providing
consolidation (which was renamed Bearing Point), Ernst start-to-finish assistance, the need to
& Young signed a non-compete agreement have IT skills has grown.
continued
with French firm Capgemini and Correspondingly, IT consultancies
PricewaterhouseCoopers’ consulting work have become interested in developing the
was absorbed into IBM’s global operations. strategies they once helped to implement.
Deloitte was the only firm to remain in the As such, IT consultants and management
industry and has established itself as a consultants are finding themselves more
market leader. The three other firms are often in competition with each other.
facing a highly competitive marketplace. Many of the major players in these
Arthur Anderson (now rebadged as industries have become so intertwined
Accenture) has developed a strong that they struggle to differentiate their
foothold in the industry, with its greater various consulting operations.
focus on IT solutions. This trend has emerged during the
This is the other great shift to occur in past five years and is likely to be
the industry in recent years. At one point, exacerbated by the current downturn.
IT consultancy and management Companies will look to increase
consultancy were distinctly different economies of scale by offering a full
business propositions. However, today it service for clients including assessment,
is increasingly apparent that IT skills are advising, implementation and post-
critical in implementing strategic or payment assistance. This will mean that a
change-management processes. As greater meshing of IT and management
management consulting firms have consulting activities will be required.
Fierce competition Increasing competition from other strategy and risk management. As the
industries providing consultancy services economy has turned down, the level of
has led to reductions in fees in recent differentiation has dropped markedly.
years, causing some minor reduction in Today, companies offer similar services
revenue. Also, during the earlier part of centred on aiding cost-cutting activities.
the past five years, consultancies focused As such, competition is based on
on developing proprietary methods of price comparisons, driven by cost-
evaluating and advising on change conscious clients.
Redundant Mergers, buy-outs and acquisitions by exhibiting low barriers to entry,

consultants get larger industry participants have restructuring by large players can
minimised any increase in establishment actually have the effect of increasing the
competitive
numbers. Low barriers to entry are number of small companies in the
encouraging smaller players to enter, but short-term. Consultants that are made
the increasingly competitive environment, redundant by firms cost-cutting advisory
with major players slowly gaining greater services often decide to begin their own
market share of crucial corporate consultancies focusing on their area of
spending, is ensuring establishment specialisation. This has the effect of
growth remains comparatively low next to driving wages down, and reducing
revenue growth. productivity. The industry’s average wage
In this industry, as with any industry is set to fall by 0.8% over the five years
employing highly skilled specialists through 2010-11, to $114,200.
Redundant
Proﬁt vs. wages Employees per establishment
consultants get
competitive 12.50 8.0
continued 7.7
6.25
7.4
% change
Ratio
0.00 7.1
6.8
−6.25
6.5
−12.50 6.2
Year 02 04 06 08 10 12 14 16 Year 02 04 06 08 10 12 14 16
Proﬁt Wages
Industry The reliance on outsourced consultants

that the business world has developed over
billion and the primary driver of this will
be a resurgent economy and its associated
Outlook the past decade is unlikely to abate due to boost in business confidence and
the brief economic downturn. Companies outsourcing. As key economic indicators
are expected to embrace consultants with begin to recover, consumer spending
renewed vigour after the Australian grows and company profits rebound, firms
economy begins to recover, with growth will once again be inclined to invest in
reaching a high of 6.7% in 2012-13. Over expansionary activities. Management
the five years through 2015-16, real consultants thrive in this environment as
industry revenue is expected to increase at they can offer highly differentiated
an average annual rate of 4.8%, to $8.96 services, priced at a premium rate.
Consulting becomes Since the late 1990s, businesses and

more popular governments have outsourced numerous Themeshing of different
operations and have employed an
increasing number of consultants.
forms of consultancy will
Outsourcing advisory services and other encourage more new firms
sporadically required work has become a to enter the industry
recognised means of cutting costs and
stimulating growth, and is certain to
continue its growth in popularity as the the Accountancy Services industry) have
economy recovers. recently indicated that they are
Continuing strong competition from preparing to re-enter the management
other industries – including the consultancy business and re-establish
accountants, IT consultants, and to a these operations in-house, which will
lesser degree the environmental and inject significant revenue into the
technical consultants – will ensure industry. It will also contribute to the
continued innovation in service offerings, growing similarities between many
as well as greater investment by firms in industries offering advice to clients.
consulting services. This greater Accounting and financial advice will
acceptance of the value of consultants is likely become another service offered by
necessary for industry growth. management consultants.
PWC, KPMG and Ernst & Young (from On the whole, it is expected that
Consulting becomes stronger economic growth over the next are likely to take an active role in the
more popular five years will increase industry activity, development and implementation of the
demand, revenue, and external national broadband network, which will
continued
competition. Furthermore, consultants place millions of dollars into the industry.
Hitting the bottom In terms of the management consultancy important and in many cases a key
line component, the major growth areas are reason behind a company’s choice of
currently in training and productivity management consultant firm. The
improvement; skills audits; enterprise balance of work in the consulting area
bargaining implementation; right-sizing has tended to shift more towards
of businesses and building on core technical consulting (and
activities and competitive strengths; total implementation) and away from
quality management; advising on and management and strategic consulting.
implementing world’s best practices; and This shift towards a more holistic
to a lesser extent on information service offering is indicative of an
technology strategies. industry that is beginning to run out of
Other important areas for management new markets. Without new potential
consultants are in providing information clients the competition is peaking in the
system; financial and administrative form of denying competitors as much
services; and strategic, corporate and market share as possible. This will be
business planning. As part of the most notable in the major players’
industrial structural adjustment occurring balance sheets. Offering wide-ranging
in Australia, many companies are seeking services across varying industries and
advice on investment opportunities in skill sets is a costly enterprise, and these
Australia and internationally, and in firms will be willing to eat into their own
implementing world’s best practice margins to hamper competitors’ growth.
techniques in their companies to ensure Profit margins have historically been as
long-term financial viability. high as 20% industry wide, and have
Increasingly, consultants are being hovered around 16% for much of the past
asked to assist in implementing their two decades. This trend appears to be at
recommendations and to monitor and an end due to the cost-cutting of the
evaluate the progress of that global downturn.
implementation. The emphasis therefore In 2010-11, profit is expected to be
is not only to offer solutions but also to only 10% of revenue and while this is
assist the client in their implementation. expected to pick up again as corporate
In some cases this has involved helping spending lifts, the high cost of doing
clients find finance for new or expansion business in the new market will ensure
ventures. Emphasis is on providing that the new average profit level will be
quality service and helping clients to lower. Figures closer to the low teens are
implement the recommendations. expected as increasing competition from
However, helping clients to implement IT Consultants and Managed Service
recommendations, which from the providers, whose computing expertise
perspective of the consulting firm may be threatens one of the industry’s growth
seen as work with low return and high sectors, couples with the existing
input, is increasingly being seen as competitive industry pressures.
Competition for Due to the nature of the work done by

talent management consulting firms, many have, Increasing competition
and will continue to have, problems in
both attracting and then holding onto their
will likely increase price
employees. However, this has been less of pressure and force down
a problem recently due to the less charges and profits
attractive environment now offered by
businesses in the IT and e-commerce areas
after many high-tech company collapses. consultancy operators are expected to
Over the next five years, there is still increasingly dominate the industry,
expected to be pressure on what however there is still room for small
management consultants can charge, specialist and professional consultants to
based on continuing price competition provide quality service, expertise and
within the industry and from continuing results in niche areas.
restraints on clients’ consultancy These smaller niche management
budgets. Historically, management consultants must have good contacts,
consultants have gained a reputation of personal networks and low overheads.
being a high-charging industry, as staff Most importantly, they must be able to
are often highly skilled, trained and develop a reputation for providing quality
educated, while senior consultants and timely service, results and
routinely possess first-hand knowledge of implementation expertise to clients.
working in an industry for which they This increasing meshing of different
now consult. forms of consultancy, along with low
As a result firms have often competed barriers to entry, will encourage more
on skills and experience rather than new firms to enter compared to the last
price. However, increasing competition, five years. Increasing differentiation of
particularly if the large accountancy firms service offerings and greater focus on
re-enter the market, is likely to increase access to top talent will ensure the
price pressure and could possibly force average wage also grows. This focus on
down charges and profits. securing the best analysts will drive up
Smaller consultancies will continue to demand for their service, internally to the
form alliances with other small industry and externally to clients. This
specialised firms to undertake consulting means that pay is set to increase notably
work in well-defined areas, rather than to an industry average of $124,000 in
carrying the significant overhead costs 2015-16, representing an average annual
associated with full-time staff. increase of 1.6% and adding another
The current leading management contributor to constrained profit levels.
Life Cycle Stage While the industry may be growing internationally,
the Australian industry is in its maturity
Increasing globalisation has led to a broader
geographic spread internationally, but is
leading to moderate growth in Australia
External competition is increasing, and is expected
to continue to become more prominent
Competition is increasingly based on price, particularly
among smaller players, leading to lower revenue growth
30 Maturity Quality Growth

% Growth of profit/GdP
Key Features of a Mature Industry

Company High growth in economic
consolidation; importance; weaker companies Revenue grows at same pace as economy
level of economic close down; developed Company numbers stabilise; M&A stage
importance stable technology and markets Established technology & processes
25
Total market acceptance of product & brand
Rationalisation of low margin products & brands
Mining
20
15
Engineering
Quantity Growth
Consultancy Many new companies;
Services minor growth in economic
importance; substantial
10 technology change
5 Consumer
Goods
retail
Computer Consultancy Services
0
Management
Computer Consultants
Shakeout
and related
Equipment Mfg
Shakeout
–5
decline Potential Hidden Gems Time wasters

Crash or Grow? Future Industries Hobby Industries
–10
–10 –5 0 5 10 15 20 25 30
% Growth of establishments
Industry Life Cycle The increasing globalisation of the cycle stage.

economy in terms of imports, exports and The ease with which new players can
investment by companies has increased enter the industry is ensuring that the rate
Thisindustry the need for access to professional advice. of establishment growth remains positive.
is Mature However, international firms are Many new companies are not successful,
becoming increasingly prominent in the as evidenced by slower growth in revenue
Australian industry and multinational among small firms and sole traders
clients may be inclined to employ compares to their larger competitors.
consultants from overseas to consult for The Management Consultants industry
their Australian operations. can become highly price competitive
Over the past decade, the industry has during times of economic uncertainty.
enjoyed consistent expansion through During these times smaller players in the
greater adoption of outsourced advice market often have to compete with
from clients and a broadening of service negative margins to attract a client base
offerings by players. This incorporation and can therefore be forced out of the
of wholesale service, from advice to market altogether.
implementation and assessment, has led Competition is coming from more
to increased revenue, greater wages and sectors than in the past, as management
improved profits. consultancies broaden their focus to
Continuing outsourcing of many incorporate implementation of advice
business management services, including alongside simply assessing and analysing.
management consulting and strategic As a result, IT consultancies, banking and
planning, by businesses and governments finance strategists, and insurance
is tending to prop up any reductions in consultants are increasingly competing
growth due to economic downturns. The with industry players, reducing the
industry has, in the past, benefited from likelihood that they will remain profitable.
the outsourcing of management consulting The industry as a whole is competing
functions and from the downsizing of in an environment where it has to
some internal advisory and strategy indicate real, tangible and measurable
functions by businesses and government. results over time to clients that are in line
However, some large clients may now with its report recommendations. It also
consider bringing aspects of this function has to provide value for money outcomes.
back in-house, due to relative cost There are a number of other industries
considerations and some recent that compete directly with this
significant failures and cancellations of management consultants for projects.
large federal government contracts. This increasing competition, particularly
from external sources, such as IT
Innovation and complexity consultancies, has placed price pressure
The external operating environment is on the industry, driving revenue levels
increasing in complexity due to down slightly.
companies and governments striving for Over the coming five years, the
better practice and a more strategic industry faces a substantial threat from
approach to its operations. alternative consulting providers,
Management consultants have particularly in the IT and management
experienced growth in revenue and value services sector. However, the aggressive
added beyond that of GDP during the last adoption of similar services by
five years, and are expected to continue management consultants is likely to
to do so over the coming five years. Prior mitigate this in the medium-term,
to the economic downturn in 2001-2002, although competition between the two
the industry exhibited growth rates more industries – and other consulting
closely equivalent to that of a growing life providers – will remain fierce.
Products & Markets

Supply Chain | Products & Services | Demand Determinants
Major Markets | International Trade | Business Locations
Supply Chain Key buying industries

B Mining in Australia
The resources boom is creating greater demand from the mining sector as they attempt to
streamline administrative procedures.
G5000 Consumer Goods Retail in Australia
The retail sector has numerous structural concerns, particularly in light of the sale of Myer and
the redevelopment of the Coles Group.
L Property and Business Services in Australia
There is demand from the corporate sector for outsourced business advice, planning and
implementation from management consultants
Key selling industries

C2841 Computer and Related Equipment Manufacturing in Australia
Computer equipment is essential to the provision of industry services.
L7713 Office Property Operators in Australia
Major consulting firms require prestigious office locations in order to maintain a reputation for
excellence.
Products & Services Specialist management consultancy In some areas, management

services have grown significantly over the consultancy firms directly compete with
past decade. Major players now tend to corporations in other industries that
bring in the services from other specialise in these areas such as IT,
companies, when required, in areas such human resources and business planning
as human resources and finance for consulting. However, many large firms
advisory and implementation assistance have recognised that evaluating an
– particularly for sporadically required organisation’s structure, personnel,
services. There is also significant systems and technology is part of the
competition in certain areas coming from corporate review process and these
other industries including accountancy services should be offered. Conversely,
and employment agencies. some firms (particularly Accenture) have
As the Australian economy has broadened into management and IT
slowed, there has been a notable shift consultancies, offering a variety of
in the offerings of most consultancies. services across both fields.
While general consultancy services
once mainly covered activities such as Greater integration
change management and strategic Increasingly, larger clients have
advice, the growing emphasis, in the requested that management consultancy
short term at least, is on assisting firms firms assist in implementing their
with cutting costs. recommendations and that they also
The move from proprietary methods of carry some of the risk (and share in the
evaluating and advising companies on success). Part of this process may involve
growth and expansion strategies to more a success fee basis, with payments
simplistic advice on where to make staggered over time. This new process is
cutbacks, and the most efficient and used particularly when clients need cost
effective way of implementing these cuts, reduction services or productivity and
is having only a minor effect on the profit-driven initiatives. Strategic
industry’s service offering. The industry’s alliances between management
client mix has not changed, and many consultants and other specialist
consultants who were involved in growth consultancy firms are also occurring to
management are equally qualified to offer a broader range of services to clients
assist in downsizing. without increasing overheads.
Products & Markets
Products & Services Over the last five years, there has been (like Accenture), will likely increase the
continued minimal change in the product presence of IT consulting services,
segmentation in the industry, and possibly resulting in a minor increase in
IBISWorld expects no significant changes the revenue share of the general business
over the next five years. Growing management consulting services
competition from external sources, such segment, which is already the industry’s
as information technology consultants primary product.
Products and services segmentation (2011)

3.4% 3.1%
Market research Production
6.4% services management
Financial business
management services
8.7%
Marketing management
consulting services
43.7%
General business management
consulting services
15.7%
Human resource management
consulting services
19%
Other management
Total $7.1bn consulting services
Demand The demand for management consulting

Determinants services is thought to be closely linked to Strong
growth in the
the economic cycle. It is particularly
sensitive to business and government
finance sector has driven
activity levels, in areas such as mergers, demand for management
acquisitions, de-mergers, exports, business consultancies
and financial planning, feasibility studies,
human resources planning, strategic
planning, and policy and planning issues. company, domestically or internationally.
Companies’ expenditure on outsourced Expenditure on government
consultancy is widely considered to be a consultants, however, is coming under
discretionary cost, and can be deferred or fire as being unnecessary. Governments
cancelled during periods of economic are increasingly willing to bring in
uncertainty. However, the need to consultants from the private sector to
institute changes to maximise profits streamline processes and implement
when revenue is falling encourages structural change, and these costs are
companies to continue making use of viewed with some scepticism by the
outsourced consultancy. public. In countries with less transparent
public services than those in Western
Outsourcing continues to grow countries, this check on government
Many firms are increasingly outsourcing expenses is far less comprehensive, and is
because the expertise of external analysts therefore less likely to mitigate
is often widely respected and can be government spending.
invaluable when operating in difficult While some firms will employ
regulatory regimes, or when expanding a consultants to protect them against
Products & Markets
Demand potential future losses, the employment of sector is the industry’s largest client base.
Determinants consultants is predominantly viewed as a As such, the strong growth that that sector
cost incurred when a company is has experienced has been instrumental in
continued
performing well, and looking to expand driving growth among management
service offerings, or is looking to deal with consultancies. Other sectors that drive
the difficulties inherent in expansion. As industry growth include Federal and State
such, growing business profits routinely Governments and the Retail sector, which
influence growth in the industry. increasingly looks to consultants to aid in
The Banking, Finance and Insurance supply chain management.
Major Markets The industry mainly obtains its revenue best practice.
from the business and government This sector segment of the industry’s
sectors as part of their consulting market is falling as governments and
budgets. IBISWorld estimates that other industries become more inclined to
around 77.4% of the revenue is derived outsource assistance in management
from the business sector, 60% of which is decision making and implementation. It
derived from the banking, finance and is still the largest segment in the
insurance industry (which equates to industry, at 46.4% of revenue, and is
46.4% of total industry revenue), and the almost certain to remain so for the
remainder from government at all levels, foreseeable future. However, as the
primarily state and federal. acceptance of management consulting
Demand from the business sector has economy-wide grows, it is likely to
fluctuated in line with economic assume a slightly diminished role as the
conditions and business confidence. dominant market segment.
However, demand has been increasing in Historically, the management
areas associated with business re- consulting industry has relied heavily on
engineering, increasing labour firms in the finance and insurance sector
productivity and skills. Globalisation has for income, but companies across all
also spurred demand – in terms of sectors are increasingly becoming
import competition, export development inclined to invest more heavily in
and investment, mergers and consulting services such as supply chain
acquisitions, technology use, access and management, customer relationship
transfer and achieving overall world’s management, human performance
Major market segmentation (2011)
6.8%
State Governments
15.8%
46.4%
Federal Government
Finance, Banking
and Insurance Sector
31%
All other
private businesses
Total $7.1bn SOURCE: WWW.IBISWORLD.COM.AU

Products & Markets
Major Markets management, strategy, and finance and decisions and management of the public
continued performance management. This segment service. IBISWorld expects this to continue
has thus increased in prevalence in its over the five years through 2015-16,
share of industry spending, up to 31.0%, moderately increasing its share of industry
from 25.2% five years ago. revenue generation, most likely at the
Over recent years, state governments expense of the banking, finance and
have increased their expenditure on insurance sector, which may reduce
consultancy outsourcing, both on policy consulting costs as the economy slows.
International Trade While the industry is experiencing a surge

in the level of globalisation, operations in International
companies
management consultancy are almost
exclusively conducted domestically by establish Australian offices
local firms, or local branches of major to conduct business
international firms. One of the largest
drivers of greater globalisation has been
the introduction of major international with offices established in countries
firms (outside the US) in the wake of the where their services are required. Any
sale of the Big Four’s consulting services. exporting of services is not performed by
However, the industry’s major players Australian firms or Australian branches
do conduct operations internationally of global firms.
Products & Markets
Business Locations 2011
NT
0.5
QLd
8.9
wA
10.1
SA
2.8
NSw
40.3
ACT
5.7
VIC
31.0
revenue (%)
Cold Zone (<10) TAS
0.7
<25
<50
Hot Zone (<100)
Not applicable
Products & Markets
Business Locations The industry is centred on the major

commercial cities of Melbourne and Improving technology and
Sydney, predominantly due to the greater
access to clients (such as banks and
increasing globalisation
insurers) in those areas. As such, New will cause the industry to
South Wales has 37.7% of industry become decentralised
establishments and only 33.7% of
Australia’s population – a 4 percentage
point discrepancy. employment due to the presence of the
While New South Wales exhibits a industry’s major players, who have
disparity between establishments and greater employee numbers than the
population of 4 percentage points, its smaller industry participants.
share of revenue is markedly larger, at The Australian Capital Territory is the
40.3%, or 6.7 percentage points greater only other region to have a greater share
than its share of population. This of establishments than population, but
suggests that the bulk of the nation’s only has a small share of revenue
major players, who achieve substantially considering the amount of money spent
larger revenues per establishment than on consulting services by the federal
smaller firms, dominate these regions, government. The bulk of contracts won
while having minimal comparative by major players are handled by offices
involvement in other states (with the and consultants in Melbourne and
notable exception of Victoria). The Sydney, while smaller firms competing
establishments in these regions have high for niche contracts from the government
revenue-earning capacity because they tend to have offices in the Australian
have larger populations and also because Capital Territory to better access those
the bulk of firms in the Finance, Banking with a prominent role in the political
and Insurance sector base themselves in process. An increasing part of consulting
these areas. involves maintaining contacts and
networks with those who have the
High-performing states capacity to enact changes to assist certain
Other states to have a significantly industries. In this way, consultancies are
greater share of establishments than beginning to build closer relationships
population are Victoria, with a 3.2 with PR firms.
percentage point discrepancy (25% of
national population and 28.2% of Western Australia and Queensland
establishments) and the Australian Another state with an unusual
Capital Territory (1.6% of population and discrepancy is Western Australia. While
3.8% of establishments). While Victoria not having a disproportionate number of
(particularly Melbourne) has a high level establishments to population (9.3% of
of industry activity for similar reasons to establishments, 9.8% of population), the
those of New South Wales, the Australian state generates 10.1% of industry
Capital Territory has a high proportion of revenue, suggesting high productivity
industry establishments due to the close amongst establishments in the region.
proximity to federal government, which This can most likely be attributed to the
is the largest single user of management rapid growth currently being
consultancies in Australia. experienced in WA as a result of the
Victoria also shares a disproportionate commodities boom being generated by
share of revenue, with 31% of national high demand for natural resources in
income, 6 percentage points greater than China and India, with mining companies
population share and 2.8 percentage requiring greater levels of logistical and
points greater than establishment share. managerial coordination.
New South Wales and Victoria also The only state to exhibit a
exhibit a high proportion of national disproportionately small number of
Products & Markets
Business Locations industry representatives on a per capita Outlook

continued basis is Queensland, which has a 4.7 IBISWorld estimates that Western
percentage point discrepancy between Australia will continue to grow as a
establishment numbers and population revenue-raising state over the next five
(18.6% of population and 13.9% of years. Whether this will be sustainable
establishments). The likely reason for depends on the long-term success of the
this is the low level of business state’s mining industries. Queensland,
penetration in Queensland, due to its however, has had steady growth across
predominantly rural nature. many industries over the past decade.
The exception in this region is This trend has slowed in recent years,
Brisbane, which contains the vast bulk of however. IBISWorld expects revenue
the Queensland population, and tends to growth to continue in Queensland,
be more urban and corporate than the bringing its share more in line with
more rural Queensland as a whole. population. This growth will most likely
However, IBISWorld expects the take place at the expense of New South
Queensland region is to exhibit some Wales and Victoria, as improving
growth over next five years (as it has been technology and increasing globalisation
displaying growth over the last five and nationalisation (i.e. major firms
years), due to the increasing levels of may be inclined to set up offices in
consultancy provided to the mining smaller centres such as Adelaide and
industry, which exists in remote Perth) will likely lead to a mild
Queensland locations such as Mount Isa. decentralisation across the industry.
Distribution of revenue vs. population Distribution of revenue vs. establishments
50 50
40 40
Percentage
Percentage
30 30
20 20
10 10
0 0
ACT
NSW
NT
QLD
SA
TAS
VIC
WA
ACT
NSW
NT
QLD
SA
TAS
VIC
WA
Revenue Revenue
Population Establishments
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalisation
Market Share While there are numerous widely-known the lower end of the industry for local
Concentration and reputable management consultancies government and small- to medium-sized
operating in Australia, the industry is business contracts. The ease with which
highly fragmented due to the sheer volume small players can enter the market, and the
Level
of small firms operating on a highly high capacity for providing niche services
Concentration in specific skill or regional basis. The ease are prime drivers of such a fragmented
this industry is Low with which a consultancy can be started industry. Another 1,408 establishments
means that any individual with the have 20 or more employees, including 83
requisite skills can enter the industry at a with more than 200 staff, which highlights
moment’s notice. As the industry has the divide between large and small firms.
broadened its services – specialising in In 2008-09 and 2009-10, it is likely
individual industries as opposed to broad that the industry will see brief spike in
strategic skills – individuals with skills in the number of sole proprietors and
certain industries may enter as well. For partnerships, as consultants made
example, a former telecommunications redundant during restructuring look to
executive may act as a subcontractor to establish their own firms. This will cause
many telecommunications companies. The a small increase in industry
recession in 2009 saw many skilled fragmentation, however, it is likely to be
workers losing their jobs, and for many, short lived, as other small firms may be
consulting acts as an effective interim step. acquired by larger consultancies during
As a result, the industry’s major their restructuring.
players account for less than 15% of Over the five years through 2015-16,
industry revenue. Competition between the level of concentration in the
these players is fierce, but the divide Management Consultants industry will
between major players and smaller firms continue to increase, as major
is stark. The largest firms, while corporations increase their emphasis on
controlling 15% of revenue, only mergers and acquisitions. The sale of the
represent 8.0% of establishments, major accounting firms’ consulting arms
indicating that the average size of offices to existing consulting firms is a prime
for the large firms is markedly greater. example of this tendency to increase
concentration. Despite low barriers to
Recession boosts small firms entry, the rate at which small players
The industry has two extremes, one being enter the industry is expected to slow as
that 98.4% of establishments expect to the market becomes saturated to the
have 19 or fewer employees. These small point that there is insufficient clientele
groups engage in intense competition at for prospective consultants.
Key Success Factors Provision of development Willingness to outsource

programs for personnel when appropriate
A key component of being part of a skill Companies should have access to
IBISWorld identifies and knowledge intensive industry is the consultants with specialist skills to offer a
250 Key Success ability to devote considerable resources broader range of services to clients and
Factors for a to on-going staff training. assist in containing overhead costs.
business. The most
Use of production techniques that Possession of accurate information
important for this
add value to base product(s) It is important that companies have
industry are: Companies must be able to develop access to a national and international
specialist and value added services at information data base, or reports and
higher charge out for rates that are highly data, with ease of access and transfer.
valued by clients.
Key Success Factors Access to the latest available and most Ability to effectively
continued efficient technology and techniques communicate and negotiate
Access to the latest and appropriate To have strong presentation skills in
computer software and hardware, relation to client report presentations
maximum labour productivity and to and for tenders is a key success factor for
have support as a key success factor is companies in this industry.
needed to be successful in this industry.
Cost Structure After furious cost-cutting in 2009, revenue, demonstrating the industry’s
Benchmarks margins in the industry will benefit in labour intensive nature. Work performed
2010-11, expanding to 10% of revenue. by the industry, while beginning to focus
Low levels of capital input and operating more on the implementation of
expenses mean that once project fees recommendations, still primarily revolves
cover the wages of consultants being around the provision of advice, for which
employed, much of the remainder is the cost of expert labour remains pre-
considered profit. Depreciation, quite low eminent. Among the industry’s major
at 3.0% of revenue, reflects the low firms, wage pressures are often not as
capital expenditure the industry incurs. high, as effective management of staff
Beyond standard office equipment and and project assignments, coupled with
computers there are no compulsory greater economies of scale, can improve
capital costs. staff efficiency.
In general, labour costs are the Beyond ordinary wages, the industry is
industry’s predominant cost, at 55% of beginning to invest more in outside
■ Profit Industry Costs and Average Sector Costs

■ rent
Industry
0 2.0 100%
■ utilities 10.0 5.0 3.0 14.0 55.0 11.0
Costs
■ depreciation Profit
(2011)
■ Other
■ wages 1.9
■ Purchases Average Costs
of all Industries 18.2 5.0 2.8 26.4 34.5 11.4
Profit
in sector (2011)
INduSTry COdE ANd TITLE
C2841 Computer and related Equipment Manufacturing

−− −−
2005-2010 2011-2015
−
L7713 Office Property Operators
Costs for operators in the Management Consultants industry are affected by the price of goods and
services from supplier industries. IBISWorld has estimated the trends of key input prices over the
previous five years and for the coming five years. is good news for this industry as IBISWorld
•
expects the price of key inputs to fall; shows where this industry is negatively affected as IBISWorld
-
expects the price of key inputs to rise; means price changes will not be a key issue for the industry.
Cost Structure labour. As the skills required of a is reflected in the wage they command.
Benchmarks consultancy broaden, it becomes more Purchase costs, at a low 11% of
economical to share skilled staff on revenue, centre on the purchase of
continued
secondment. Mid-size firms, which specific equipment required to assist in a
cannot afford to keep a broad variety of certain consultancy project. The greatest
skilled staff on its payroll, tend to rent its purchase cost is the cost of accessing
staff to other firms, which return the information to aid decision making.
favour with its own talent. This pushes Access to market research reports can be
total industry spending up toward 60% of quite expensive, and as the industry’s
revenue. However, this increase in success is predicated on the performance
outsourced labour does not represent an of analysts and consultants, high quality
increase in wage costs over time. In the information is considered crucial as a
late 1990s, total wages – including a decision-making tool.
much smaller subcontracting cost – Other costs, at 10% of total industry
absorbed more than 60% of revenue. revenue, represents expenses such as
The average wage in the industry is marketing costs (including advertising
expected to be quite high at an estimated and establishing a presence at
$114,200, due to the high quality of many conferences and seminars), insurance
consultants. Consultants often possess costs, employee benefits and other
substantial tertiary education, along with retention programs (such as bonuses or
experience in the industry or sector in company cars) and recruiting, along with
which they perform their consultancies. the transportation and accommodation
Consultancies often charge high fees for of consultants when conducting projects
the services of their consultants, and this for clients in interstate or remote areas.
Basis of Competition This industry is very competitive, with a becoming more demanding and seeking
high number of firms ranging from large, further work from business management
internationalised entities to small, services companies for the same budget
Level & Trend non-employing, area-specific companies. (or even a reduced budget).
ompetition
C in Over the past decade, the industry has More importantly, clients are
this industry is become increasingly competitive between becoming more results oriented, are
High and the trend existing consultancies and external seeking quantifiable targets and more
companies looking to eat into their direct results for their money. They are
is Increasing
market share. During periods of also demanding consultants be more
economic difficulty, this competition involved in actually implementing their
tends to focus increasingly on price and recommendations, particularly in the IT
service offerings become more area, and also in access and delivery of
homogenised – that is, assisting with cost financial resources to implement any
cutting and redundancies rather than agreed strategy.
growth strategies. Strategic alliances between companies
Reputation is essential for a in this industry and those in the IT and
consultancy to operate effectively. This is finance areas are continuing to be
most often built on quality performance important in terms of implementing and
and the word-of-mouth promotion it delivering recommended strategic
generates. The high fees charged by directions. During periods of low profit
players in the industry serve to demand a growth competition can become
high quality of performance, which a increasingly price-based, particularly
good reputation infers. among smaller firms that do not have the
The industry has a significant number luxury of pre-existing branding or
of operators and the barriers to entry are reputation to attract clients.
low. Clients are also increasingly Also, larger players tend to promote
Basis of Competition themselves on their expertise in specific

continued areas of management, or a variety of Niche
offerings are an
industries they posses specialists in. The
Boston Consulting Group, for example,
invaluable means of
provides a list of experts on their websites helping small firms to
and the field of expertise they consult in. compete on a large scale
A reputation for excellence overall and in
specific fields can be a major selling point.
Niche offerings are an invaluable means This included Ernst & Young reaching
of helping smaller firms to compete, as an agreement with Capgemini, the sale of
broad, generic services can be acquired by KPMG’s Australian consulting arm into
the major players, which benefit from the USA as Bearing Point and
greater exposure. PricewaterhouseCoopers’ sale of its
consulting arm to IBM. Deloitte Touche
External competition Tohmatsu, however, restructured its
Consultancies attempt to provide a consulting activities and kept it in-house,
broad-based and vertically integrated operating as a subsidiary of Deloitte.
service offering, in terms of providing
consultancy and assistance with Outlook
implementing the advice from the analysis IBISWorld expects continued
conducted. This is leading the industry convergence between operations in this
into conflict with other industries that industry and those of players in the IT
overlap with new services offered. Consultancy industry, meaning that
This is particularly the case with there will be increasing competition
Chartered Accountancy, IT, Finance and from players such as IBM, EDS and
Employment/Human Resources firms. CSC. However, these groups will most
The sales of the consulting segments of likely refrain from entering the industry
the Big Four accountancy firms during in a wholesale manner and the points of
the early 2000s has created new IT, differentiation between those
business and management consulting companies and existing players will
groups, which have worldwide ensure that the level of competition is
representation and experience. unlikely to change markedly.
Barriers to Entry The prominence of small one- or two- for larger management consultancies) of
person operations (particularly in the US) a particular industry, skill or geographic
Level & Trend is evidence of the ability of new industry region (intimate knowledge of Chinese
entrants to access the requisite capital to culture and the Chinese economy is
arriers to Entry
B establish a new company. Capital costs particularly valuable in the current
in this industry are are minimal, as basic computing economic climate), while targeting clients
Low and Steady equipment is all that is required, and with interests in these industries, skills or
business may still be conducted without regions. However, new entrants to the
this, while regulations governing the industry often possess skills and
industry are minimal. Some industries expertise relevant to their service
require licensing, or membership of a offering, which is often the primary
particular industry group. Without this motivation for starting a firm, and as
type of official ratification, business can such, absence of specialty skills is mostly
be difficult to obtain. limited to new players looking to offer
broad advice on non-specific issues.
Service Specialisation Major players in the industry have
New companies can exploit specialist sufficient staff with varied skills to allow
knowledge (often acquired while working conducting multiple projects at lower cost
Barriers to Entry per project than smaller competitors. As

continued such, new entrants need to compete with barriers to entry checklist Level
one another, rather than with the majors. Competition High
The industry is not a heavy advertiser, Concentration Low
and reputation and having a network of Life cycle stage Mature
existing clients willing to continually Investment requirements Low
utilise services can be crucial to success. Technology change Low
Many startup management consultancies, Regulation & policy Light
however, are created by consultants with Industry assistance None
existing experience and connections,
most often developed during tenure with SOURCE: WWW.IBISWORLD.COM.AU
a large consultancy firm.

IBISWorld expects the industry to emerging Asian markets, larger industry
maintain a low level of barriers to entry firms have in recent years become
over the outlook period, as initial outlay highly acquisitive, particular attention
is minimal and there are few specialised has been paid to entities in emerging
management consultants in the markets with an established client base.
Australian market when compared with Meanwhile, growing horizontal
the US, which has a $130 billion industry. integration by larger firms in an effort
However, larger players in the industry to prevent clients going elsewhere for
are quite dominant, and the economies of implementation services has led to an
scale they posses make it difficult for increasing challenge to smaller firms
smaller companies to compete effectively. to match that service provision offered
Also, in an attempt to gain market by large firms exploiting economies
share and establish a foothold in of scale.
Industry While Australia does not have any

Globalisation domestically-based major players, there The 10 largest management
are many global firms, and their
international reach is increasing.
consulting firms account
Level & Trend According to IBISWorld estimates, the for a small, but growing,
lobalisation
G in 10 largest management consulting firms share of global revenue
this industry is in the industry only account for 10% to
Low and the trend 11% of global revenue, however this is
continually increasing, as large firms domestic activity.
is Increasing
continue to expand into international IBISWorld analysis indicates that
markets where they consider there to be a there are few major operators in this
vacuum in the industry. industry based outside of the US,
The largest industry players are although firms such as Capgemini (Paris)
continuing to expand globally, through indicate the growth of major firms in
establishing branch offices in the Asia Europe. Major players are
Pacific and Middle East regions, China overwhelmingly located in North
and other similar emerging economies America and Europe, as the skills
and regions. Therefore, the overall level required to perform in this industry are
of industry globalisation is estimated to generally acquired in Western education
be low but is increasing gradually. The institutions, and those who attend said
majority of operators in this industry are institutions are highly likely to remain
regarded as having a low level of based in the US.
globalisation due to being US owned and Another explanation for the low level of
are earning the bulk of their sales from globalisation in the industry is the location
Industry of the bulk of the major players’ head Specialisation and connectivity
Globalisation offices. With the exception of Capgemini, Increasing connectivity between
which itself purchased the consulting arm developed economies is allowing large
continued
of accounting firm Ernst & Young in 2000, industry players to broaden their
all major players are based in the US. international approach by conducting
While these firms all conduct international consulting projects across international
operations, their origins in the United borders, increasing industry globalisation.
States have necessitated a recent move Clients of firms in this industry
into international markets and are demand a high level of customisation of
subsequently increasing the industry’s services and personal attention, which
level of globalisation. minimises the ability of firms to offer
IBISWorld expects the industry to internationally homogeneous services
remain at a low level of globalisation over that many service-based industries can
the five years through 2015-16, as smaller afford to do. Client firms often require
players in specific geographic regions, advice tailored to the business culture of
particularly Europe and North Asia gain the geographic region in which they
a foothold. Also, large clients will operate, ensuring that while the level of
increasingly utilise the services of globalisation in the industry is increasing,
multiple consultancies as a risk the predominance of large multinationals
management strategy that is most likely will be mitigated by the specialist
against the recommendations of their requirements that can be offered by local
current consultants. niche competitors.
Major Companies
Accenture Australia Holdings Pty Ltd | Marsh Mercer Holdings (Australia) Pty Ltd
Deloitte Touche Tohmatsu | Boston Consulting Group Pty Ltd | Other
Major players Boston Consulting Group Pty Ltd 1.7%

(Market share) Marsh Mercer Holdings (Australia) Pty Ltd 3.6%
86.7%
Other
Deloitte Touche Tohmatsu 3.1%
Accenture Australia Holdings Pty Ltd 4.9%
Player Performance Accenture is one of the world’s leading Arthur Andersen. Andersen Consulting
management consulting, technology was upset that it was paying Arthur
services and outsourcing organisations, Andersen up to 15% of its profits each year
Accenture Australia with approximately 140,000 employees; (a condition of the 1989 split was that the
Holdings Pty Ltd offices and operations in more than 150 more profitable unit – AA or AC – paid the
Market share: 4.9% cities in 49 countries; and revenues other this sum), while at the same time
before reimbursements of US$23.39 Arthur Andersen was competing with
billion for fiscal 2008. Andersen Consulting through its own
Accenture grew from the collapse of newly established business consulting
Arthur Anderson Consulting in the wake service line.
of the Enron collapse and associated This dispute came to a head in 1998
concerns regarding auditors and when Andersen Consulting claimed
consultants involved in the process. breach of contract against AWSC and
Increasingly, Accenture’s focus is on Arthur Andersen. In August 2000,
providing IT assistance, and as a result, Andersen Consulting broke all
the company’s IT consulting revenue is of contractual ties with AWSC and Arthur
growing importance to the company’s Andersen. As part of the arbitration
total revenue. IBISWorld estimates that settlement, Andersen Consulting was
around 48% of Accenture’s revenue falls required to change its name, resulting in
under the purview of the IBISWorld the entity being renamed Accenture.
definition of management consulting, Its organisational structure includes
hence for 2008, global revenue was divisions based on client industry types
estimated to be around US$11.1 billion. and employee workforces. Industry
divisions, referred to as operating groups,
History include Products (e.g. consumer packaged
Accenture originated as the consulting goods or industrial equipment),
division of Arthur Andersen which was Communications High Technology and
founded in 1913 by Arthur Andersen and Media (CHT), Financial Services (e.g.
Clarence DeLany and was named banking and insurance), Resources (e.g.
Andersen, DeLany & Co. utilities, chemicals and energy), and
In 1989, the consulting division split Government. The employee workforce
from Arthur Andersen (AA) and began divisions are respectively titled Consulting,
using the name Andersen Consulting Services, Enterprise and Solutions.
(AC). Both Arthur Andersen and Accenture’s business is structured
Andersen Consulting consisted of groups around these five operating groups,
of locally-owned independent which together comprise 17 industry
partnerships and other entities around groups serving clients in major industries
the world, each in a contractual around the world.
agreement with Andersen Worldwide
SocieteCooperative (AWSC), a Swiss Performance
administrative entity. Accenture has exhibited strong growth
Through the 1990s there was increasing across all sectors over the five years
tension between Andersen Consulting and through 2010-11 (see revenue tables) and
Major Companies
Player Performance overall company revenues have grown at In 2007, collaboration with Macquarie
continued an annualised rate of 16% over the last Bank to consolidate their global human
ten years. In recent years, growth in the resources functions led to a marked
Asia Pacific region has encouraged increase in revenue beyond the normal
further incursions into that region, organic growth the company has been
particularly growth in the EMEA experiencing. Also, organic growth in IT
(Europe, Middle East and Asia) region consulting as well as the acquisition of
has been well below the US and Asia over numerous small IT systems design firms
the same period. contributed to the 78.1% increase in
Accenture maintained its place as revenue. However, little of this revenue
Australia’s largest consulting firm over falls under the banner of management
2009-10, with a market share of around consulting and thus Accenture’s market
5% of revenue, or $340 million. The share remained more stagnant.
increasing collaboration between For Accenture’s Australian operations,
management consulting and IT consulting revenue fell in 2003 as the result of a
arms of major firms has left Accenture shift to new, international accounting
ideally placed, as they were among the first standards. Since then, revenue growth
to adopt an IT consulting strategy in the has been strong, increasing by 19.6% in
wake of the Arthur Anderson collapse. In 2005 and 16.5% in 2006. IBISWorld
2008, the company actually saw a drop in estimates that around 48% of total
revenue, which bucked not only the revenue is generated by activities in
long-term trend but also the company’s management consulting, rather than IT
international performance. The reduction consulting services, and as such, revenue
in revenue is likely to be only a momentary in 2009-10 was expected to be around
hiccup as demand for consulting services $340 million, which equates to
was very strong going into 2010. approximately 5.0% of total revenue.
Accenture Australia Holdings – financial performance

revenue Net income
year* ($ million) (% change) ($ million)
2003-04 379.0 N/C -3.7
2004-05 453.4 19.6 -15.1
2005-06 528.4 16.5 13.5
2006-07 941.3 78.1 70.2
2007-08 923.6 -1.9 20.6
2008-09 998.7 8.1 N/A
*year end August

SOURCE: IBISWORLD
Major Companies
Player Performance Marsh Mercer Holdings (Australia) Pty and reduction, actuarial services and
Ltd, incorporated in 2001, is the more. In 2009, the company reported
Australian proprietary company owned revenue of $568 million and employed
Marsh Mercer by foreign entity Marsh & McLennan 2,365 people.
Holdings (Australia) Companies Inc. Like Marsh Mercer Despite the industry’s poor performance
Pty Ltd Holdings, there are other subsidiaries of globally in 2008 and 2009, Mercer’s global
Marsh & McLennan worldwide, operations, via Marsh & McLennan,
Market share: 3.6%
providing personnel, organisational, managed 3.6% growth in 2009. However,
risk-management and many more types despite this comparatively buoyant
of consultancy services. growth, the company posted a loss of
Marsh Mercer Holdings provides US$75 million, down from a profit of more
services for risk management and than US$2.0 billion a year earlier. The
insurance, and the company segments its company’s Australian operations are likely
operations. The company’s risk to have suffered a poorer fate – much of
management segment includes insurance the growth came from branches of the
and reinsurance broking. The consulting business operating in developing
services segment conducts risk evaluation economies like China and India.
Marsh Mercer Holdings – financial performance

revenue NPAT
2004 448.5 N/C 66.0
2005 444.1 -1.0 49.8
2006 494.4 11.3 50.3
2007 536.8 8.6 59.1
2008 560.9 4.5 58.8
2009 568.0 1.3 62.2
year end december

SOURCE: IBISWORLD
Player Performance Deloitte Consulting, the only remaining

consultancy of the Big Four auditors, has deloitte Australian (consulting
established a substantial foothold in the segment) -- financial performance
Deloitte Touche industry based on taking substantial
Tohmatsu business from its former competitors. year* revenue (% change)
Market share: 3.1% The parent company, Deloitte Touche
Tohmatsu, has also experienced 2005-06 523 N/C
substantial growth in its broader 2006-07 618 18.2
operations, which has been mirrored by 2007-08 772 24.9
the consulting arm. In 2007-08, total 2008-09 852 10.4
Australian revenue was $772 million, of
2009-10 820 -3.8
which 18.5% was consulting revenue,
representing estimated 2008-09 market *year end May
share of around 2.6%. SOURCE: ANNUAL REPORT AND IBISWORLD
Internationally, Deloitte is established

Major Companies
Player Performance as one of the world’s two largest six consecutive years of double-digit
continued consultancies (along with Accenture), revenue growth from continuing
with operations in 140 countries, and operations. Revenue growth was 13%
total DTT revenue reaching US$27.4 when measured in local currencies.
billion in 2008. Global consulting Deloitte faces increasing competition in
revenue was $6.3 billion in 2008, or 22% the form of the return of the other Big
of total global revenue. Asia Pacific Four firms – Ernst &Young,
growth in 2008 was the fastest of any PricewaterhouseCoopers and KPMG.
region, increasing at 30.3%, although However, these companies re-enter the
much of this growth took place in China, market at a distinct disadvantage, having
India and Vietnam. Aggregate revenue of lost significant market share to Deloitte
Deloitte member firms for the year and Accenture over the seven years since
ending 31 May 2008 was US$27.4 billion, they exited the industry, while also
an increase of 18.6% in U.S. dollars over surrendering older clients to the firms that
the previous year. It was the highest in were established in the wake of their exits.
Player Performance The Boston Consulting Group (formerly that 80% of its largest 50 clients that
Pappas Carter Evans and Koop), was engaged BCG over the last five years are
established in 1979 and has always placed continuing to use their services.
Boston Consulting an emphasis on the necessity of Its activities include the areas of
Group Pty Ltd companies to watch their overhead business strategy, marketing and sales
Market share: 1.7% structure and associated costs. Most of its strategy, strategy audit, industrial policy,
senior consultants have worked with organisation structure, time-based
leading consultancies in the US or UK competition, new product development,
and competitor analysis has been an portfolio strategy, international
important aspect of their work. development, optimising equity value,
The Boston Consulting Group (BCG) is diversification, financial policy, product
an international company and has offices positioning and information technology.
in 18 cities across the globe such as Its clients have included Pacific Dunlop,
London, Milan New York and Paris. Rheem, Castlemaine Tooheys, Macquarie
BCG seeks to establish an on-going Bank and more.
and long-term relationship with its It has recently assisted an airline to
clients and, like most others, guarantees respond to changes in its competitive
to maintain an uncompromising policy of environment, assessing the performance
client confidentiality. The company of various business units for a bank,
indicates that its success can be shown in undertaking a strategic review for an
boston Consulting Group – financial performance

revenue NPAT
2004 84.6 N/C 3.1
2005 83.2 -1.7 2.1
2006 75.5 -9.3 -7.2
2007 97.9 29.7 5.3
2008 84.9 -13.3 4.3
2009 109.8 29.3 5.8
*year end december

SOURCE: IBISWORLD
Major Companies
Player Performance insurance company, assisting an BCG tends to operate as a large

continued international petrol retailer with its boutique that offers highly-skilled staff
Australian retail strategy and reviewing who specialise in specific industries or
the pricing structure for a building areas of expertise. This has been a
products manufacturer. disadvantage, as larger firms continue
For 2009 the company reported to expand their operations to cover a
29.3% revenue growth, which followed broad range of concerns. The new
2008’s 13.3% decline. Total revenue as of one-stop shop method of consulting is
31 December 2009 was $109 million, becoming more popular as it can save
with net profit after tax at $5.8 million. on costs and fees.
Other Companies Beyond the industry’s largest players, the benefits of less travel time and cost as
industry includes many smaller well as giving access by clients to their
operations specialising in niche services. world wide group of consultants. About
This is best evidenced by the 81.6% of 40 of McKinsey’s consultants are
firms that are sole traders or partnerships. involved in consulting in the
telecommunications, electronics and
McKinsey Australia New Zealand media industries in the Asia-Pacific
Estimated market share: 1.8% region. A specialty has involved advising
McKinsey’s local operation is a subsidiary on the process and implementation of
of the McKinsey in the US located in skill building, monitoring progress
Seattle with the local agent for the against world’s best practices and on
company is Dabserv Corporate Services defining a company’s theoretical limits.
Pty Ltd, which is located in Sydney. It is McKinsey’s consulting tasks usually
estimated that McKinsey generated average between $1 million and $2
around $110 million in Australian million each. It became involved in the
revenue in 2007-08, representing around (then) fast growing IT consulting area.
1.8% of market share. Like many other high-profile consulting
McKinsey usually commands fees in firms to early 2000, it was experiencing
excess of $5,000 per day, although its problems holding onto staff, with
philosophy is that it is not selling time competition coming from start-up IT and
but techniques. It has 100 consultants in dot com businesses. It has a deliberate
Australia (and 120 overall, including corporate policy of not being involved in
support staff) and has expanded rapidly assisting its clients to implement its
in Asia, with offices in Seoul, Taipei, report recommendations. This goes
Hong Kong, Tokyo and Osaka. These against the industry-wide trend of
were initially supplied with some staff increasing integration between
from Sydney and Melbourne. consulting, advising, overseeing
McKinsey’s Australian operations implementation and execution, then
received a significant boost when it was assessing the success or failure of
announced that they, in conjunction with a contract. This company policy is
KPMG, would advise on the development intended to give a greater perceived
and implementation of the national level of independence for McKinsey from
broadband network, first announced in its clients.
2007. The contract was originally worth McKinsey indicates that some of the
$25 million and is likely to be extended current major issues facing Australian
as the broadband operation continues. companies are innovation, balancing
The company has invested in video increasing shareholder value with wider
conferencing facilities and both social responsibilities, performance
Australian offices are linked as part of management while recognising the value
their world network. This offers the of cultural capital (including skills and
Major Companies
Other Companies knowledge) and possibly re-engaging with billion in 2002 to $4.1 billion in 2007, as
continued the Asia-Pacific region for expansion. continuing major contracts have arrived
as the business community and
Booz & Co. government have become increasingly
Booz Allen Hamilton (BAH) has long willing to outsource management advice
been a presence in the Australian and decision-making assistance.
management consulting scene. In early Employment growth has mirrored
2009, however, the company decided to increases in revenue, going from 11,300
split in two, with Booz & Co., the original staff in 2002 to around 21,000 in 2007.
consulting firm formed in 1914, re-
emerging as the global consulting player, IBM and Bearing Point
while BAH retained its focus exclusively Estimated market share: 0.5%
on US Government Consulting jobs. IBM, after purchasing the consulting arm
While the parent company was of PWC in 2001, has increasingly taken its
established in 1914, Booz Allen has been focus away from management consulting
operating throughout Australia, New services in favour of IT consultancy and
Zealand and South East Asia (ANZSEA) systems design, which is more in line with
since 1987. With over two hundred the company’s core business.
employees across seven offices in three Meanwhile, Bearing Point, which
countries, Booz Allen ANZSEA has been KPMG’s consulting services segment
experiencing strong year on year growth, became in 1997 and spun off as an
while maintaining its regional independent entity in 2001, has also
headquarters in Sydney, through which it increased its focus on technology
manages all operations across ANZSEA, consulting. With international revenue of
under one management structure for the $3.46 billion, IBISWorld estimates
entire region. Australian Management Consulting
Global revenue growth has been strong revenue is around $85 million, or 0.8%
over recent years, increasing from $2.2 of total industry revenue.
booz Allen Hamilton – financial performance

revenue
year ($ million) (% change) Employees
2003 2,300 4.5 14,000
2004 2,700 17.4 16,000
2005 3,300 22.2 17,300
2006 3,700 12.1 19,000
2007 4,100 10.8 21,000
2008 4,000 -2.4 N/C
SOURCE: ANNUAL REPORT

Operating Conditions
Structural Risk Index | Investment Requirements | Technology & Systems
Industry Volatility | Regulation & Policy | Industry Assistance | Taxation Issues
Management Consultants Property and Business Services

Structural Risk
Index
Barriers to Entry Barriers to Entry
Industry Relax Points ity ity
til C til C
Exports
ola
ola
om
om
eV
eV
Imports
pe
pe
nu
nu
titi
titi
Revenue Volatility
Reve
Reve
on
on
Industry Pressure Points
Barriers to Entry 54.0 47.6
Life Cycle
Life Cycle
Competition Score Score
Levels of Assistance
Expor
Expor
ts
ts
Sta
Sta
ge
ge
Le Le
ve ve
ls o s ls o s
f As ort f As ort
sistance Imp sistance Imp
IBISWorld has scored key elements of Property and Business Services division.
industry structure on a scale of 1 to 9 – The industry structural risk index totals
the higher the figure, the greater the risks 54.0 points compared to 47.6 points for
to businesses operating in the industry. the Property and Business Services
Operating conditions in the division as a whole (100 points equates to
Management Consultants industry are extremely poor operating conditions).
more risky than in other industries in the
Investment The consultation process is highly

dependent on the consultant conducting Capital intensity
Requirements Capital units per labour unit
work and top consultants are in
Level extremely high demand. Labour costs are 0.60
a reflection of the experience,
The levelof 0.50
qualifications and skills of individual
investment consultants, along with high demand for 0.40
required is Low consultants who specialise in a certain 0.30
industry or sector. 0.20
Over the past five years, the level of
0.10
capital investment compared to labour
costs has remained relatively static. The 0.00
Economy Property and Management
minimal level of capital required to Business Consultants
Services
operate a consultancy means that the Dotted line shows a high level of capital intensity
ratio between labour and capital is SOURCE: WWW.IBISWORLD.COM.AU
somewhat constant.
Some assistance in increasing labour operators in this industry have to offer
productivity is available in areas such as IT high levels of customer service, often on a
(hardware and software) communications, face-to-face basis.
(mobile and video-conferencing and by Therefor the industry is labour
e-mail) and in the delivery of reports using intensive, particularly in the knowledge
digital means. Like most service industries, and skills areas. Overtime most
Investment consultants have acquired a database of work at smaller firms.

Requirements information, knowledge and expertise in Capital costs in the industry are
certain niche or specialist areas. Most minimal as there are few, if any,
continued
areas of operation require a high degree compulsory costs in regards to capital
of direct labour input, from liaising with equipment for performing consulting
clients and undertaking any necessary work. Basic computing equipment is
consultations and seminars, to data used, but the work performed is based on
gathering and analysis. personal interaction and utilising the
Historically, the industry has skills and expertise of the consultant in
experienced strong growth amongst question rather than any reliance on
non-employers. The primary explanation equipment or technology.
for this is the tendency for experienced As management consultants continue to
consultants from large- to medium-sized widen their service offerings, attempting to
industry players to attempt to establish create an integrated consultancy process
their own consultancies and taking where the consulting, advising and
existing clients along with them. In order implementation of any recommendations
to prevent this, firms have been steadily is overseen, the need to increase capital
increasing wages. However recently the expenditure will grow, particularly as they
average wage has fallen as newly branch into competitors’ services such as
redundant consultants take pay cuts to IT consultancy.
Tools of the Trade: Growth Strategies for Success
New Age Economy Investment Economy

recreation, Personal Services, Information, Communications,
Health and Education. Firms Mining, Finance and real
benefit from personal wealth so Estate. To increase revenue
stable macroeconomic conditions firms need superior debt
are imperative. Brand awareness management, a stable
and niche labour skills are key to macroeconomic environment
product differentiation. and a sound investment plan. Capital Intensive
Labour Intensive
Mining
Engineering Consultancy Services
Computer Consultancy Services

Consumer Goods retail
Traditional Service Economy Management Consultants Old Economy
wholesale and retail. Reliant Agriculture and Manufacturing.
Computer and related
on labour rather than capital Equipment Manufacturing Traded goods can be produced
to sell goods. Functions cannot using cheap labour abroad.
be outsourced therefore firms To expand firms must merge
must use new technology or acquire others to exploit
or improve staff training to economies of scale, or specialise
increase revenue growth. in niche, high-value products.
Change in Share of the Economy SOURCE: WWW.IBISWORLD.COM.AU

Technology The industry is labour intensive and

& Systems heavily dependent on an educated and The
industry depends
professional individual (or team), as
opposed to any technological innovation.
heavily on an educated
Level
The level
of
Technology in this industry primarily team as opposed to
refers to computing and online technology changes
Technology innovations, allowing greater speed and
Change is Low connectivity between offices of a firm and
between consultants and their clients. library materials, including accessing
Office technology has changed greatly, online services.
and will continue to do so. The main uses Strategic alliances with specialist firms
of technology in this industry revolve in areas such as IT and corporate finance,
around the area of office equipment are becoming more common. This is a
(computers, printers, photocopiers etc.) result of the industry’s greater focus on
and communication technology including offering services from beginning to end of
mobile communications and e-mail. the consultative process. While most
However, the bulk of companies are firms would favour taking all consulting
rapidly increasing their web presence. and implementation tasks in-house, the
That said, the essence of performing costs can be prohibitive, and transfer of
consulting work is dependent upon staff to other industries is common.
face-to-face contact. For major companies in this industry
It is also necessary in the industry the major changes relate to knowledge,
to have a web page. Some major firms including the development of strategic
have invested in a global intranet and proprietary business theories,
system which includes reports, models and practices that clients
techniques and knowledge gained from purchase. This becomes less relevant
consultancy work which may be of use during an economic downturn as clients’
to employees in similar circumstances. focus on cost-cutting. However, during a
A significant cost also relates to the boom the availability of proprietary
purchase of information, data base and knowledge can be extremely valuable.
Revenue Volatility The industry has a high reliance on The industry’s counter-cyclical
government and business consultancy tendencies protect it somewhat from
budgets. Many strategic and other major downturns, as clients often retain
Level
consultancy functions have been advisory services to assist with cost
The level of outsourced. Some companies consider cutting and redundancy packages. Also,
Volatility is Low outsourced consultancy to be a the industry has a great deal of flexibility
discretionary expense, and as a result it is to adjust to difficult periods due to its
often the first expense cut when revenue high profits, wide variety of clients, skill
falls. This tends to affect smaller firms offerings and staff. Profit can be more
more so than major players. Volatility is volatile however, as shifting skill focuses
moderately reduced as firms use often involves changing staff levels and
consultants to improve during downturns this can be an expensive proposition that
and increase profits during boom periods. eats into bottom lines.
Revenue Volatility
A higher level of revenue Volatility vs Growth
continued volatility implies greater
industry risk. Volatility can 1000 Hazardous rollercoaster
negatively affect long-term
revenue volatility* (%)

strategic decisions, such as 100
the time frame for capital
investment.
10
When a firm makes poor
investment decisions it Management Consultants
may face underutilised 1
capacity if demand
suddenly falls, or capacity 0.1 Stagnant blue Chip
constraints if it rises –30 –10 10 30 50 70
quickly. Five year annualised revenue growth (%)
* Axis is in logarithmic scale
Regulation & Policy The industry is largely self-regulated. In experience. Members are required to
terms of the management consultancy observe a code of professional conduct.
component, the Institute of Management The main objective of the institute is to
Level & Trend Consultants in Australia is the main enhance the image of the profession in
he level of
T professional body. The institute, which the community. It is designed for
Regulation is was founded in the late 1960s, is individual consultants and within it the
Light and the restricted to practicing consultants, College of Principals exists for the
where there are strict entry conditions principals of the larger management
trend is Steady
regarding qualifications and work consulting firms.
Industry Assistance The industry is not affected by tariffs,

protection or assistance.
Taxation Issues The industry is not subject to any special services performed outside of Australia
taxes. The Federal Government for a non-resident. Credits for GST paid
introduced a GST at a rate of 10%, with on inputs can now be deducted against
Level
only a few basic food exemptions, since 1 the GST payable by businesses on goods
The levelof Tax July 2000. GST, however, does not apply and services sold or invoiced in each
Burden is Low to goods exported from Australia or monthly or quarterly period.
Key Statistics
Industry Data Industry
Revenue Value Added Employment Wages Domestic
($m) ($m) Establishments Enterprises (People) Exports Imports ($m) Demand
2001-02 4,903.9 3,255.6 3,965 3,363 25,260 -- -- 2,751.9 N/A
2002-03 5,064.5 3,355.9 3,984 3,409 25,799 -- -- 2,836.6 N/A
2003-04 5,520.7 3,595.3 4,046 3,429 27,433 -- -- 3,124 N/A
2004-05 5,970 3,692.4 4,062 3,384 28,687 -- -- 3,300.9 N/A
2005-06 6,428.6 3,760.2 4,154 3,433 30,080 -- -- 3,571.7 N/A
2006-07 6,686 3,664.8 4,224 3,458 31,456 -- -- 3,673.1 N/A
2007-08 6,813.3 3,371.3 4,372 3,582 32,126 -- -- 3,802.6 N/A
2008-09 6,802.5 3,072.5 4,484 3,673 32,804 -- -- 3,766.1 N/A
2009-10 6,883 3,148.8 4,592 3,732 33,427 -- -- 3,818.2 N/A
2010-11 7,080.8 3,261.3 4,702 3,808 34,062 -- -- 3,889.9 N/A
2011-12 7,427.8 3,558.1 4,857 3,958 35,595 -- -- 4,061 N/A
2012-13 7,925.5 3,860.6 4,920 3,951 36,521 -- -- 4,268.1 N/A
2013-14 8,250.4 4,188.7 4,994 3,940 37,908 -- -- 4,528.5 N/A
2014-15 8,539.2 4,389.8 5,154 4,159 39,311 -- -- 4,850 N/A
2015-16 8,957.6 4,670.7 5,324 4,232 41,080 -- -- 5,097.3 N/A
Sector Rank 12/33 13/33 17/33 17/33 14/33 N/A N/A 8/33 N/A
Economy Rank 137/501 95/501 116/501 105/489 96/501 N/A N/A 48/496 N/A
Annual Change Industry Domestic

Revenue Value Added Establishments Enterprises Employment Exports Imports Wages Demand
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2002-03 3.3 3.1 0.5 1.4 2.1 N/A N/A 3.1 N/A
2003-04 9.0 7.1 1.6 0.6 6.3 N/A N/A 10.1 N/A
2004-05 8.1 2.7 0.4 -1.3 4.6 N/A N/A 5.7 N/A
2005-06 7.7 1.8 2.3 1.4 4.9 N/A N/A 8.2 N/A
2006-07 4.0 -2.5 1.7 0.7 4.6 N/A N/A 2.8 N/A
2007-08 1.9 -8.0 3.5 3.6 2.1 N/A N/A 3.5 N/A
2008-09 -0.2 -8.9 2.6 2.5 2.1 N/A N/A -1.0 N/A
2009-10 1.2 2.5 2.4 1.6 1.9 N/A N/A 1.4 N/A
2010-11 2.9 3.6 2.4 2.0 1.9 N/A N/A 1.9 N/A
2011-12 4.9 9.1 3.3 3.9 4.5 N/A N/A 4.4 N/A
2012-13 6.7 8.5 1.3 -0.2 2.6 N/A N/A 5.1 N/A
2013-14 4.1 8.5 1.5 -0.3 3.8 N/A N/A 6.1 N/A
2014-15 3.5 4.8 3.2 5.6 3.7 N/A N/A 7.1 N/A
2015-16 4.9 6.4 3.3 1.8 4.5 N/A N/A 5.1 N/A
Sector Rank 21/33 15/33 7/33 7/33 17/33 N/A N/A 20/33 N/A
Economy Rank 240/501 178/501 73/501 73/489 172/501 N/A N/A 233/496 N/A
Key Ratios Revenue per Share of the

IVA/Revenue Imports/Demand Exports/Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) ($’000) (%) per Est. ($) (%)
2001-02 66.39 N/A N/A 194.14 56.12 6.37 108,942.99 0.34
2002-03 66.26 N/A N/A 196.31 56.01 6.48 109,950.00 0.34
2003-04 65.12 N/A N/A 201.24 56.59 6.78 113,877.45 0.35
2004-05 61.85 N/A N/A 208.11 55.29 7.06 115,066.06 0.35
2005-06 58.49 N/A N/A 213.72 55.56 7.24 118,740.03 0.34
2006-07 54.81 N/A N/A 212.55 54.94 7.45 116,769.46 0.32
2007-08 49.48 N/A N/A 212.08 55.81 7.35 118,365.19 0.29
2008-09 45.17 N/A N/A 207.37 55.36 7.32 114,806.12 0.26
2009-10 45.75 N/A N/A 205.91 55.47 7.28 114,225.03 0.26
2010-11 46.06 N/A N/A 207.88 54.94 7.24 114,200.58 0.26
2011-12 47.90 N/A N/A 208.68 54.67 7.33 114,089.06 0.27
2012-13 48.71 N/A N/A 217.01 53.85 7.42 116,867.01 0.28
2013-14 50.77 N/A N/A 217.64 54.89 7.59 119,460.27 0.30
2014-15 51.41 N/A N/A 217.22 56.80 7.63 123,375.14 0.30
2015-16 52.14 N/A N/A 218.05 56.90 7.72 124,082.28 0.31
Sector Rank 19/33 N/A N/A 13/33 3/33 14/33 1/33 13/33
Economy Rank 124/501 N/A N/A 330/501 24/496 280/501 27/496 95/501
Figures are inflation-adjusted 2011 dollars. Rank refers to 2011 data. SOURCE: WWW.IBISWORLD.COM.AU
Key Statistics
Historical The Management Consultancy industry legislative changes (including tax law
Performance had its beginnings in Australia in the late changes), IT consulting (including
1930s, with the formation of W.D. Scott & e-commerce) and from general review of
Co by Sir Walter Scott, a cost accountant. management practices (in areas such as
The industry developed slowly until the staff downsizing, export growth, takeovers
1960s when it became more acceptable to and mergers).
Australian business to make use of In the early 2000s, the slower
management consultants. Since then economic growth and its resultant effect
numerous consultants and consultancy on business confidence was estimated to
firms have entered the market. have led to a real decline in industry
The consolidation of Australian revenue, as budgets were reduced for
industry that occurred throughout the consulting and related consulting
early to mid-1990s, due to mergers, activities. The uncertainty and
takeovers and general restructuring, complexity initially associated with the
resulted in many retrenched executives GST also led to many firms largely
establishing themselves as consultants. concentrating on its implementation and
However, it was estimated that the ensuring that the systems were in place
average life in consulting for many was and operating effectively. Business also
just over 12 months. slowed around the period of the Sydney
During the early 1990s recession, the Olympics in September 2000, as
industry was affected by the numerous domestic and international attention was
corporate collapses which occurred, focused on this world event.
coupled with the significant number of One of the other major effects on
companies that were placed in industry operators resulted from the
receivership and the associated decline in effect of the high-technology stocks
consumer confidence (particularly with correction that flowed into 2000-01 and
the collapse of companies in the financial created both uncertainty and a re-
services sector). According to industry evaluation of expenditure. This led to
sources, this led to an increased level of reduced expenditure on many internet-
funds being allocated to consultancies by and web-based plans and strategies by
many major clients as companies slashed business and governments. This was
all of their general and discretionary confirmed by an Australian Financial
consultancy expenditures. This resulted Review survey of firms on their use of
in reduced consulting work and increased consultants in this year, which found that
fee-based competition, as firms sought more than 20% had reduced their
to at least cover their short term spending on consulting.
cashflow requirements. In 2001-02 many clients reduced their
Due to the slow economic growth there consultancy budgets across most areas,
was also a tendency for clients to turn to which included strategic advice, IT and
consultancies that were highly regarded web page design. A survey by the
and specialists in their area of need, Australian Financial Review on the
although price was still an important intended use of consultants in this year
factor. Competition also increased, found that 32% of firms intended to
especially for government sector reduce expenditure on consultants. Also,
consultancies, which was estimated by while 82% of firms had used a consultant
industry sources to have accounted for in 2000-01, only 77% intended to do so
around one-third of industry revenue. in 2001-02. The main areas consultants
However, past the recession, industry were to be used were in the IT, human
surveys indicated that major management resources, mergers and acquisitions,
consultancy firms had experienced e-commerce, strategic planning and
significant revenue growth from areas business process and best practice areas.
such as assisting clients to achieve world’s IBISWorld estimated that real industry
best practice. Growth also resulted from revenue decreased by about 0.9%.
Jargon & Glossary
Industry Jargon CHANGE MANAGEMENT Consultants are brought in to STRATEGIC CONSULTING Consultants can be
oversee structural changes to a company’s operation. contracted to advise on long-term planning, with an eye
HUMAN RESOURCES CONSULTING The development to minimise costs growth and maintain profits. Often
of policies designed to ensure staff are adequately this involves the development of new products and
provided for and their productivity is maximised. services.
IBISWorld Glossary BARRIERS TO ENTRY Barriers to entry can be High, tax) of goods and services; plus transfers to other firms
Medium or Low. High means new companies struggle to of the same business; plus subsidies on production; plus
enter an industry, while Low means it is easy for a firm all other operating income from outside the firm (such
to enter an industry. as commission income, repair and service income, and
CAPITAL/LABOUR INTENSITY An indicator of how rent, leasing and hiring income); plus capital work done
much capital is used in production as opposed to labour. by rental or lease. Receipts from interest royalties,
Level is stated as High, Medium or Low. High is a ratio of dividends and the sale of fixed tangible assets are
less than $3 of wage costs for every $1 of depreciation; excluded.
Medium is $3-$8 of wage costs to $1 of depreciation; INDUSTRY VALUE ADDED The market value of goods
Low is greater than $8 of wage costs for every $1 of and services produced by an industry minus the cost of
depreciation. goods and services used in the production process,
DOMESTIC DEMAND The use of goods and services which leaves the gross product of the industry (also
within Australia; the sum of imports and domestic called its Value Added).
production minus exports. INTERNATIONAL TRADE The level is determined by:
EMPLOYMENT The number of working proprietors, Exports/Revenue: Low is 0-5%; Medium is 5-20%; High
partners, permanent, part-time, temporary and casual is over 20%. Imports/Domestic Demand: Low is 0-5%;
employees, and managerial and executive employees. Medium is 5-35%; and High is over 35%.
ENTERPRISE A division that is separately managed and LIFE CYCLE All industries go through periods of Growth,
keeps management accounts. The most relevant Maturity and Decline. An average life cycle lasts 70
measure of the number of firms in an industry. years. Maturity is the longest stage at 40 years with
Growth and Decline at 15 years each.
ESTABLISHMENT The smallest type of accounting unit
within an Enterprise; usually consists of one or more NON-EMPLOYING ESTABLISHMENT Businesses with
locations in a state or territory of the country in which it no paid employment and payroll are known as
operates. non-employing establishments. These are mostly set-up
by self employed individuals.
EXPORTS The total sales and transfers of goods
produced by an industry that are exported. VOLATILITY The level of volatility is determined by the
percentage change in revenue over the past five years.
IMPORTS The value of goods and services imported
Volatility levels: Very High is greater than ±20%; High
with the amount payable to non-residents.
Volatility is between ±10% and ±20%; Moderate
INDUSTRY CONCENTRATION IBISWorld bases Volatility is between ±3% and ±10%; and Low Volatility
concentration on the top four firms. Concentration is is less than ±3%.
identified as High, Medium or Low. High means the top
WAGES The gross total wages and salaries of all
four players account for over 70% of revenue; Medium
employees of the establishment.
is 40 –70% of revenue; Low is less than 40%.
INDUSTRY REVENUE The total sales revenue of the
industry, including sales (exclusive of excise and sales
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L7856 Management Consultants in Australia Industry Report

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Ready for the bounce: After enduring cutbacks,

the industry prepares to capitalise on the global

IBISWorld Industry Report L7856

2 About this Industry 20 Competitive Landscape 36 Key Statistics

4 Industry Performance 26 Major Companies

11 Industry Life Cycle 29 Boston Consulting Group Pty Ltd

13 Products & Markets 32 Operating Conditions

13 Products & Services 32 Investment Requirements

14 Demand Determinants 34 Technology & Systems

15 Major Markets 34 Industry Volatility

16 International Trade 35 Regulation & Policy

17 Business Locations 35 Industry Assistance

www.ibisworld.com.au | (03) 9655 3881 | info@ibisworld.com

About this Industry

Main Activities The primary activities of this industry are

The major products and services in this industry are

Similar Industries L7823 Engineering Consultancy Services in Australia

L7834 Computer Consultancy Services in Australia

L7861 Employment Placement Services in Australia

L7862 Temporary Staff Services in Australia

Additional Resources For additional information on this industry

Key Statistics Revenue Annual Growth 06-11 Annual Growth 11-16

$708.1m $3.9bn 4,702

Pty Ltd 3.6% 2

Group Pty Ltd 1.7% Revenue Employment

Key External Drivers 3.8%1.2%

Industry Structure Life Cycle Stage Mature Regulation Level Light

Executive The appeal of management consultants to outsourcing. The challenge for

Capital expenditure by the private sector Number of businesses

Current Throughout the international economic

Consulting Talented staff are getting lured overseas

Redundant Mergers, buy-outs and acquisitions by exhibiting low barriers to entry,

Industry The reliance on outsourced consultants

Consulting becomes Since the late 1990s, businesses and

Competition for Due to the nature of the work done by

30 Maturity Quality Growth

Key Features of a Mature Industry

decline Potential Hidden Gems Time wasters

Industry Life Cycle The increasing globalisation of the cycle stage.

Products & Markets

Supply Chain Key buying industries

Key selling industries

Products & Services Specialist management consultancy In some areas, management

Products & Markets

Products and services segmentation (2011)

Demand The demand for management consulting

Products & Markets

Major market segmentation (2011)

Total $7.1bn SOURCE: WWW.IBISWORLD.COM.AU

Products & Markets

International Trade While the industry is experiencing a surge

Products & Markets

Business Locations 2011

Products & Markets

Business Locations The industry is centred on the major

Products & Markets

Business Locations industry representatives on a per capita Outlook

Distribution of revenue vs. population Distribution of revenue vs. establishments

Key Success Factors Provision of development Willingness to outsource

■ Profit Industry Costs and Average Sector Costs

INduSTry COdE ANd TITLE

C2841 Computer and related Equipment Manufacturing

Basis of Competition themselves on their expertise in specific