Back in January we wrote a piece on the return of consulting to the “Big Four” accounting firms. A new report, The US Consulting Market in 2017, published and released on May 23, 2017 by Source Global Research, doesn’t just confirm our suspicions, it continues a startling precedent for the consulting market: far-reaching growth.
The survey was comprised of 635 senior clients of consulting firms across the US, who were asked questions on topics such as “how they buy consulting services” and how their initiatives will drive desire for consulting services. Covering the broad spectrum of industry demographics, both in terms of function and size, the survey sought to accurately project the near-term future of the US consulting market. Our purpose is not to evaluate the validity of this survey, but to analyze the results, and extrapolate their meaning as a part of the broader movement of the accounting market, which unlike the movement of our planet, emits a radiant wave of uncertainty.
The 2017 projected growth rate for the US consulting market is eight 8 percent, with industry projections hovering in the three 3 percent to 12 percent range. That rate of projected growth eclipses the 7.1% percent actual growth figure from 2016. By comparison, the 2017 GDP growth forecast by the International Monetary Fund (IMF) is 2.3 percent. The report projects that by the end of 2018 the US consulting market will have to increase its human capital number nearly 78,000 to satisfy current demand. With growth at over three times national GDP, and a staggering forecast of labor influx, what is the driving force behind the consulting craze?
The report highlights three trends: “the extent to which transformation is driving convergence between management and technology consulting, how the role of data & analytics in the consulting process is evolving, and the never-ending war for talent.”
The plethora of new consulting opportunities will unlikely benefit industry and firm recipients proportionally. Bolstered by blockchain and artificial intelligence innovation, technology headlines industry growth with a projected ten percent growth rate. Type A consulting companies, i.e. those with audit, tax, and corporate finance services (think big 4), serve as the only firm type with projected double digit growth at 10.2%, enhanced by Deloitte’s acquisition of Heat. Type A firms already account for 21.45 billion dollars of the 58.72 billion dollar US consulting market. Our aforementioned piece discusses the potential conflict-of-interest ramifications associated with those statistics.
Potential tax reform, full repeal or partial modification of the Dodd-Frank Act, and the revolving door of priorities within the current administration emit uncertainty that casts a wide shadow over nearly every industry. The rapid evolution of information technology, and the regulatory proposals that could be introduced in the next few years, have highlighted a continual need for consulting. This presents both opportunities and obstacles for corporations; however, no matter which side of the fence a company falls, one can expect consulting to remain and thrive as a mainstay in accounting and corporate America.
By: Todd Cheney, CPA, Accounting Policy and Practice Editor
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