Management Consulting Sector, 2007
U.S. Market Overview
The U.S. management consulting sector comprises establishments primarily engaged in providing advice to businesses and other organizations on management issues such as strategic and organizational planning; financial planning and budgeting; marketing objectives and policies; human resource policies, practices, and planning; production scheduling; and control planning.
Consulting services generate about $125 billion in annual revenue. According to the Survey of Current Business (October 2006), U.S. exports of consulting services amounted to $6.4 billion in 2005, and imports of consulting services were $5.9 billion. The industry provides employment for 605,000 people. The top-10 U.S. leaders by revenue include: IBM, CSC, Deloitte, Accenture, Lockheed Martin, Bearing Point, Booz Allen Hamilton, Hewlett-Packard, Mercer and CGI Group.
While a few U.S. consulting firms garner annual consulting revenues in excess of $1 billion, most have fewer than 10 employees and annual revenues of less than $1 million. Fueled by corporate strategy, reengineering, enterprise resource planning (ERP), the Internet boom, and Y2K technology scares, the consulting industry grew at mostly double-digit rates from the 1970s until 2000. But when the economy stalled, overall revenues shrank in 2001, stayed flat in 2002, and grew about 3 percent in 2003. The focus on cost-cutting, and caution regarding IT and other spending, chipped away at the availability of consulting work. Fee growth has generally been flat since 2001.
With the advent of Sarbanes-Oxley and notable accounting scandals, many consulting companies have divested their accounting units in recent years. However, some accounting firms like Deloitte Touche Tohmatsu have been quietly rebuilding their consulting practices.
Challenges for the industry include competition from other types of consulting services, such as accountants, financial analysts, lawyers, and computer systems analysts; economic downturns that have hampered employment; and outsourcing. Key obstacles faced by the industry in the United States and abroad include restrictive visa requirements that limit the ability for consultants to quickly visit and do business in international markets, residency/nationality requirements that limit where consultants can reside or originate from, restrictions on the form of business entities, and professional registration required for submission of documents.