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Source expects double digit growth in energy sector spend in 2013

Energy sector

London: The use of management consultants in the global energy and resources market has risen by 3 per cent during 2011-2012 to $12.9bn. Although this growth is slower than the global consulting market (7 per cent increase), there are very positive forecasts from energy and resources clients, and as a result, Source Information Services (Source), the specialist consulting research firm, estimates that global growth in this sector will be at least 10 per cent in 2013 and 2014.

A new Source report released today says that over half (53 per cent) of clients in the energy and resources sector expect to increase their spend on management consultants — with half of those saying increases will be double-digit. The UK market grew by 1 per cent in 2011-2012, but is expected to grow by 5-10 per cent in 2013 and 2014.

The report also says that the recovery is particularly important for the US market, which accounts for 44 per cent of the sector's global consulting revenue. Growth in the use of consultants in the US market will be as a result of new investment strategies as supply of North American energy soars. Also, utility companies are recognising the need to be more agile — and are therefore looking at ways both to change their pricing and also to take advantage of lower energy prices themselves.

Services in demand

Technology, operational improvement, and programme management can all expect to do exceptionally well, with around 60 per cent of clients saying that they expect spending to increase in all these three consulting services. No more than 15 per cent of organisations expect to cut spending for any of these three services, and the percentages of clients anticipating cuts of 10 per cent or more are in the single digits.

B.J. Richards, Senior Analyst at Source and author of the report commented, "The growth potential in the energy and resources market looks very strong for consultants, but our research has also found that clients expect a consulting firm to not only help them to develop a strategy or plan, but stick around to advise on the implementation, and be accountable for its success. Those firms that can do both well, will find many grateful clients."

What factors would increase the use of consultants in the sector?

  • The sector knowledge of consultants is more important to clients in the energy and resources sector than it is for clients elsewhere. How this is demonstrated through thought leadership is also important. 94 per cent of energy and resources clients agree or strongly agree that they like to find out about new management ideas.
  • While most clients (across all sectors) need to see a big price cut for price to have any impact on the amount they spend with consultants, nearly 1 in 5 energy and resources clients would take advantage of even moderate pricing adjustments to bring in more consulting help.
  • More transparent pricing was also a popular choice with a third of respondents saying this would significantly increase their use of consulting.

The Top firms in Tech...

Source also asked clients for their views on the top performing consulting firms by service line. In technology consulting, which is expected to grow the fastest, Accenture and IBM are clearly the leaders in terms of how likely they are to be mentioned. But, the firm with the happiest clients is CSC, which despite being mentioned least often is very highly regarded by those familiar with its work. IBM, the second-most mentioned firm also does exceptionally well with high happiness ratings.

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