London: The US 'big consulting' market continues to be amongst the fastest growing in the world with growth of 5.7 per cent recorded in 2013 taking it to $41.5bn in revenues. The healthcare sector — up 9.5 per cent to $4.5bn — helped drive market growth.
The recovery in the US consulting market has been so strong that it has grown by more than the size of the entire French consulting market ($6bn) in just two years.
The report, released today (5th June 2014) from leading global consulting market analysts, Source Information Services (Source), also found that financial services remains a strong sector, growing by almost 9 per cent to $9bn on the back of a tough regulatory environment. With healthcare and financial services to remain buoyant in 2014, Source predicts that the US market will be very health this year — growing by 5 per cent.
Edward Haigh, Director of Source, who presents the findings of the US report in New York on 5th June, said, "Healthcare has been a particularly buoyant market this year with a large proportion of work driven by new regulation, but the sector has also become a hotbed of activity from a digitisation perspective, as its leaders consider the opportunities that technology offers in terms of monitoring, diagnosing and delivery healthcare solutions."
Tom Reichert, Chairman of North America (New York) at BCG, said, "It's a very exciting market right now. There are huge opportunities. The market is becoming more global and more reliant on deep expertise. Clients are making bold, innovative moves to stake out positions for the next decade. We're helping them figure out the answers they need in order to leapfrog ahead."
Government consulting in the doldrums
By contrast, federal and state government consulting was the only sector in the US to shrink — with expenditure falling by 1.5 per cent to $7.78bn against a background of constrained budgets. The report says that there's work to be had in the public sector, but the scrutiny and procedures to which consulting firms are subjected in order to win it puts many off before they even get close.
From a service perspective, the Source report found that the strongest growth was in technology with 7.6 per cent growth — taking it to more than $10bn in 2013. As highlighted in the healthcare sector, the major opportunity for longer term consulting projects is digitisation. The report says that there is also interest in traditional IT solutions due to underinvestment in technology during the financial crisis.
Operational improvement — the biggest service line in the US consulting market at $13bn remained strong — growing by 6.3 per cent in 2013. Simple cost-cutting is giving way to an interest in productivity and efficiency, especially in situations where organisations are trying to grow without adding to their cost base in doing so.
Will the US run out of consultants?
The report says that you don't grow a new French consulting market in two years without having problems on the supply side — particularly with the supply of talent. One of the challenges is localisation — three quarters (76 per cent) of the US consulting market is based in just 15 cities, and over half of this (53 per cent), is based in just three — New York, Washington and Chicago.
Edward Haigh concluded, "Underneath a buoyant market the forces of disruption are growing in strength and compelling consulting firms to change who they are, what they do and how they do it. Added to which there are grave concerns about the depth of the talent crisis within the US, to the extent that the US is in danger of running out of consultants altogether.
This comes at a time when more confident clients are still subjecting consulting expenditure to intense scrutiny, often preferring to do things in house wherever possible, and insisting on understanding what value they're going to get if they turn to consultants for help."