Consulting Industry Faces Great Challenges and Great Returns, 5-18-2007
Consulting services generated about $156 billion in revenues in the U.S. during 2006, according to Plunkett Research estimates. This is an increase of about 12% over 2005 estimates resulting from a survey by the U.S. Bureau of the Census. Accounting services generated an additional $110 billion in 2006, up about 8% according to Plunkett Research estimates. Kennedy Information, places the global consulting market (including management, human resources and information technology consulting) at nearly $280 billion in 2006 and $300 billion in 2007. After a decade of sizzling growth and enviable profits, the consulting business was forced to pull in its reins during 2001-2003. However, consultancies are posting significant growth today, and generally the industry posted very good financial gains for 2005-2006. Major consulting firms are hiring again-stalking the ivy-covered halls of America's best business school campuses in search of the best and brightest new MBAs. Consulting is once again ranked as the most desirable industry by new grads at top schools. Certain trends have impacted the industry, changing the face of consulting. Some examples include:
- Consulting Firms Accept Assignments with Contingency Fees.
With the understanding that today, more than ever, corporate clients want fast results and a high return on investment in consultants; many major consulting firms are accepting contingency payment for part of their fees. This practice recognizes the fact that client companies are taking big risks and facing large fees when hiring consultants.
- Government Consulting is Strong, Including IT, Transportation, Defense and Security.
America's emphasis on homeland security post-9/11 has led to a rapid ramp-up of spending for products and services in relevant areas, particularly consultancies with expertise in security, surveillance, intelligence and related infrastructure.
- Offshoring to India Drives Changes in Global Consulting.
U.S. domestic employment figures paint a grim picture in some industries due to "offshoring," or the movement of jobs to other countries in order to cut costs. India is creating both the largest problem and the largest opportunity for consulting companies based in the U.S. and Europe.
To find out more about these exciting trends and more, check out Plunkett's Consulting Industry Almanac 2007, just released, or go to www.plunkettresearch.com and sign up for a subscription to Plunkett's completely up-to-date online database!
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