Management Consulting Services
Management Consulting Services
The management consulting industry includes establishments primarily engaged in providing advice and assistance 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. This industry also includes general management consultants that provide a full range of administrative; marketing, process, physical distribution, logistics, and other services to clients.
Factors Affecting Competitiveness
The consulting industry yields enormous profits but is volatile to market forces. Consulting revenue depends on economic growth, and especially on corporate profits. Consultants are considered an expendable cost when companies face an economic slowdown.
Small and midsized consulting firms face greater competition from bigger firms that can offer clients a variety of services. Big firms are adding fields of expertise through acquisitions, often buying the consulting practices and other non-audit services of accounting firms. Large firms are increasingly expanding their reach into areas once served mainly by small consultants. Subsequently the trend of private equity firms buying existing businesses raises the need for pre- and post-acquisition consulting. Aside from the large consulting firms, most consultants specialize in providing services to a particular company or industry, leaving them vulnerable to customer and industry changes. For example, a large number of IT consulting companies were affected in the last recession when corporate customers cut computer technology budgets. Small consulting firms may get the majority of their revenues from a handful of clients.
Key obstacles facing the consulting industry in expanding exports include restrictive visa requirements that limit the ability for consultants to quickly visit and do business in international markets, residency or nationality requirements that limit where consultants can reside or originate from, restrictions on the form of business entity, professional registration required for submission of documents, and onerous licensing requirements (for certain areas of consulting). Larger consulting firms frequently engage in international business, either because their clients have an international component or because they themselves have foreign offices.
Trade in Consulting Services
The United States has a consistent trade surplus in business and management consulting services. That surplus has grown steadily since 2014. U.S. exports reached $66.9 billion in 2019, with a surplus of $27.2 billion.
European countries are the primary destinations for U.S. exports of consulting services. Ireland leads the list of top markets, with $13.2 billion in U.S. exports in 2019, followed by the United Kingdom ($8.6 billion), Switzerland ($6.5 billion), and Germany ($6.4 billion). The European Union as a whole attracts a large amount of U.S. consulting services, with the 27-member bloc accounting for $28.4 billion in U.S. exports in 2019.
Important non-European markets include Canada ($3.1 billion in U.S. exports), Singapore ($2.8 billion), Japan ($2.1 billion), and Brazil ($1.6 billion).
The United Kingdom is by far the top source for U.S. imports of consulting services, with $7.3 billion in imports in 2019. However, the U.S. still has a $1.3 billion trade surplus in consulting services with the UK.
Other key import sources include the Netherlands ($3.9 billion imports in 2019), Canada ($3.3 billion), Switzerland ($3 billion), and India ($2.6 billion).
By region, a majority of both U.S. exports and imports in consulting services are with Europe, though the Asia-Pacific region remains an important partner as well, accounting for 16 percent of U.S. exports and 25 percent of U.S. imports.
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Accounting, Legal, and Management Consulting Services