With the Big Four accounting firms leading the way in growth, the U.S. management consulting market expanded 7.1% in 2016 after growth slowed midyear, according to a report released Tuesday by Source Global Research.
U.S. company spending on consulting reached $58.7 billion last year, up from $54.7 billion in 2015. The Big Four continued to claim a large share of the U.S. consulting market, with revenue growing by 10.2% to $21.5 billion, according to the report.
Part of the growth is credited to mergers and acquisitions, the most notable being Deloitte’s acquisition of digital marketing company Heat, indicating its intent to build a strong position across the digital spectrum.
“The Big Four have once again outperformed the competition in the U.S. consulting market, and by flexing their financial muscle they have continued to bring disparate service lines together to offer the broadest solutions to their clients,” Fiona Czerniawska, director of Source Global Research, said in a news release.
Some of the market growth is attributed to an explosive digital transformation with a demand for cybersecurity, up by 30%—generating $7.1 billion in consulting revenue—as clients hoped to safeguard their digital empires after a number of high-profile hacking incidents in recent years.
The 2016 market growth slowed midyear before closing strong because clients were more cautious as Brexit made the world economy feel less certain and as an unexpected result in the U.S. presidential race began to look more plausible, according to the report.
Other highlights from the report, The US Consulting Market in 2017, include:
- By industry, financial service companies accounted for the largest share of the market at $14.8 billion, up by 8.3%, followed by manufacturing—such as aerospace, automotive, and construction—at $8 billion.
- Although pharma and biotech brought in the least revenue at $1.92 billion, it was the fastest-growing industry, up by 11.9%.
- By service, the most money, or $15.8 billion, was spent on technology consulting, up by 10%, followed by risk and regulatory consulting—which includes responding to regulation, technology, and security risk services—at $15.3 billion.
Source Global, which has offices in London and Dubai, projects that the U.S. consulting market will continue to grow in 2017, estimating an 8% increase leading to $63.4 billion in revenue.
Consultants feel positive about the year ahead, even though there is caution with how President Donald Trump’s policies will affect their specific industries and the larger economy, the report states. For now, the economy remains strong, and clients are pursuing new initiatives.
—Anslee Wolfe is a freelance writer in Colorado Springs. To comment on this article or to suggest an idea for another article, contact Ken Tysiac, editorial director, at Kenneth.Tysiac@aicpa-cima.com or 919-402-2112.