GLOBAL CONSULTING MARKET

Table of Contents

▪ Industry Landscape 3–8

▪ Competitive Positioning 10–17

▪ Opportunity Assessment 19–20

▪ Appendix 22

© 2018 RocSearch. All Rights Reserved. 3

The consulting industry consists of five main functional areas—Operations, Strategy, Financial Advisory, Human Resources (HR) and Technology

MARKET STRUCTURE

Source: Consultancy.uk

Process Management

Supply Chain

Procurement

Finance Operations

Outsourcing

Project Management

Corporate Strategy

Economic Policy

Mergers & Acquisitions

Organizational Strategy

Functional Strategy

Corporate Finance

Restructuring

Actuarial Services

Risk Management

Real Estate Advisory

Forensics & Litigation

Organisational Change

HR Technology

Learning & Development

Benefits & Rewards

Talent Management

IT Advisory

ERP Implementation

Data Analytics

Application Development

Systems Integration

Enterprise Architecture

TechnologyOperations Technology Technology TechnologyTechnology TechnologyHRFinancial AdvisoryStrategy

CONSULTING INDUSTRY

Digital Transformation Consulting

• Business & Organisational Impact

• Change Management

• Creativity and Innovation

• Customer Experience Design

• Legacy & Backend Integration• Infrastructure & Security

Strategy Design

Technology

Digital Transform-

ation


The Middle East followed by Asia Pacific, registered the highest growth rates in 2017 as these regions typically comprise countries that are at low–medium level of maturity

REGION SUMMARY

Source: RocSearch Analysis

x%

xx

x%

xx

x%

xx

Market Size and % share of consulting market in 2017

Market Maturity

High

Medium

Low

x%

xx

x%

xx

Growth in 2016–17

x-x%

x-x%

x-x%

x-x%

x-x%

North America Europe

Latin America

AfricaMiddle East

Asia Pacific

x-x%xx

x%


Global consulting market has grown at a CAGR of xx% during 2011–16, with Asia-Pacific being the fastest growing region, primarily due to accelerated growth of Chinese consulting market

MARKET SIZE AND SEGMENTATION – GLOBAL


Note: 1) Europe, the Middle East and Africa

xx xx xx xx xx xx

xx xx xx xx xx xx

xx xx xx xx xx xxxx xx xx xx xx

xxxxxx xx

xxxx

xx

2011 2012 2013 2014 2015 2016 2017 2019

Strategy Operations Financial Advisory HR Technology

• Digital and business model disruption has primarily been the driving factor behind the growth of consulting globally, particularly in more mature markets

• Due to increasing globalisation, companies require more sophisticated and internationally oriented services, thus increasing demand for management consulting services

• Asia Pacific had the highest growth momentum with a CAGR of x% during 2012–16, while the EMEA region and North America grew at a CAGR of about x% during 2012–16, on an average

xx xx xx xxxx

xx

xx

xx

xx

xx

xx

Financial Advisory Operations Technology HR Strategy

x

x

x

x

EMEA North America Asia Pacific Others1

CAGR (2011–16)

x%

x%

x%

x%

x%

CAGR (2012–16)

x%

x%

x%

x%

Global Consulting Market – By Value (USD bn, 2011–2016) Global Consulting Market – By Function (%, 2016) Global Consulting Market – By Region (%, 2016)

xx

xx


In 2017, the global digital transformation market almost xx in size as against 2016MARKET SIZE AND SEGMENTATION – GLOBAL


Note: 1) Europe, the Middle East and Africa

xx

xx

xx

xx

Other Services

HR

Strategy

Technology

xx

xx

xx

Australia

UK

US

• In 2017, the global digital transformation market accelerated to USDxx bn, from USDxx bn in 2016, increasing by ~xx%

• Increasing demand to digitise among most large businesses, and need to fight off challenges from new digitally savvy competitors, is expected to provide a major opportunity for consultants to grow their revenues

─ Top strategy firms, such as AA, BB and the CC, have invested heavily in their digital lines in anticipation of this

─ Irrespective of breadth of services provided by tier-1 consulting firms, tier-2 and tier-3 firms are also preferred due to their flexibility and cost-effectiveness for the client

x%

x%

x%

x%

x%

Deloitte Accenture McKinsey KPMG, PWC & EY Others

% of countries’ total consulting

market

x%

x%

x%

Digital Transformation Consulting – By Segments (USD bn, 2016) Digital Transformation Consulting – Market Share (%, 2016) Digital Transformation Consulting – By Region (USD bn, 2016)


Eastern European consulting market represents is the bright spot in Europe having posted a xx% CAGR during 2010–16, compared with the region averaging xx% CAGR during the period

MARKET SIZE AND SEGMENTATION – EUROPE

Source: Consultancy.uk; consultancy.eu

• The UK, Germany and France, respectively, are individually the largest markets, though these being mature economics, their growth during 2010–16 was slightly lower than the average CAGR for Europe

─ During this period, consulting market in Eastern Europe grew two-folds compared with Western Europe

• Financial Advisory plays a much larger role in the UK, attributed to its large financial sector; in contrast, a number of services offered by financial consultants in the UK are commonly performed by local lawyers and accountants in the DACH region

• As Eastern Europe largely comprise emerging economies, the share of operational consulting is relatively much higher compared with other functions

xx xx xx xx xx xx xxxx xx xx xx xx xx xxxx xx xx xx xx xx xx

xx xx xx xx xx xx xxxx xx xx xx xx xx xxxx xx xx xx xx xx xxxx xx xx xx xx xx xx

2010 2011 2012 2013 2014 2015 2016

Scandinavia Benelux Southern Europe DACH Region

Eastern Europe France UK & Ireland

xx xx xx xx xx xx xxCAGR

(2010–16)

x%

x%

x%

x%

x%

x%x%

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

xx

Scandinavia

Benelux

SouthernEurope

DACHRegion

EasternEurope

France

UK &Ireland

Technology HR Financial Advisory

Operations Strategy

European Consulting Market – By Region (USD bn, 2010–2016) European Consulting Market – By Function (%, 2016)

1

Note: 1) D — Deutsch (German), A — Österreich (Austria), CH — Schweiz (Switzerland)


Germany, China, Saudi Arabia, India, the UK and US are among the fastest-growing markets for consulting services

RELATIVE COUNTRY BENCHMARKING

Source: consultancy.uk; consultancy.eu; consultancy.asia; consulting.us; Barnes Report 2017Note: 1) Market assessment criteria are covered in the appendix section; (continued in slide notes)

Country Name1 Region Consulting Market Size (USD, 2016)

Growth(%, 2015-2016)

Digital Evolution Index Score 20172

Ease of Doing Business Ranking

Number of Management Consulting

Establishments

ICT Development Index Ranking3

The US North America xx xx 3.61 6 xx 15The UK Europe xx xx 3.67 7 xx 5Germany Europe xx xx 3.36 xx xx xxChina Asia Pacific xx xx 2.49 xx xx xxFrance Europe xx xx xx xx xx xxAustralia Asia Pacific xx xx xx xx xx xxRomania Europe xx xx xx xx xx xxIndia Asia Pacific xx xx xx xx xx xxSpain Europe xx xx xx xx xx 27Italy Europe xx xx xx xx xx 46Saudi Arabia MEA xx xx xx xx 17,499 xxThe Netherlands Europe xx xx xx xx 6,838 xxSingapore Asia Pacific xx xx xx xx 2,793 xxBrazil Latin America xx xx xx xx 87,515 xxSweden Europe xx xx xx xx xx xxBulgaria Europe xx 2 xx xx xx xxDenmark Europe xx 4 xx xx xx xxUAE MEA xx xx xx xx xx xxNorway Europe xx xx xx xx xx xxBelgium Europe xx xx xx xx xx xxFinland Europe xx xx xx xx xx xxQatar MEA 0.33 xx xx xx xx xxKuwait MEA 0.18 xx xx xx xx xxOman MEA 0.1 xx xx 71 xx 64

MARKET ATTRACTIVENESS: HIGH MEDIUM LOW

Table of Contents




▪ Appendix 22



Tier-2 and tier-3 firms provide increased service flexibility, and prove to be cost-effective for their clients

COMPETITIVE SCENARIO

Suppliers with diversified service line and geographic capabilities

Suppliers with limited service line and geographic coverage; mid-sized companies (medium revenues)

Suppliers with niche capabilities or operations in a specific geography

Fee Level

Geographic Reach

Breadth of Service Offerings

Team Structure Overhead

Buyer Negotiation

Power

Pyramidal with junior associates

Gamut of services within their chosen area

Pyramidal with very few fresh hires

Focused on service line

Boutiques do not employ fresh hires

Key Attributes

High Medium Low-Med Low

Global Players Overview


Spain# x

x%xx

Sources: Consultancy.uk; consultancy.eu

Note: 1) Many of the fastest growing firms listed above have ‘Technology Consulting’ and ‘Digital Transformation’ capabilities

Tier-2 and tier-3 players recorded higher growth rates during 2015–17 than tier-1 consulting companies

INDUSTRY HEALTH ASSESSMENT

France# x

x%xx

2.3

2.8

3.4

4.7

5.0

7.7

11.5

14.5

15.4

16.0

A

B

C

D

E

F

G

H

I

J

10%

5%

-4%

7%

12%

1%

6%

11%

8%

5%

Revenue – Consulting Business (USD bn, 2016)

Revenue Growth (%, 2015–16)

2%

2%

2%

3%

3%

5%

8%

10%

10%

11%

Market Share(2016)

3,200

2,200

60,000

14,000

23,000

30,000

1,300

40,513

46,000

Employees(2016)

411,000

Europe's thirty fastest-growing consulting firms achieved an average CAGR of xx% during 2015–17xx%

UK# x

x%xx

# Number of Consultancies in Top 30

CAGR (2015–17)

Average Full-time Equivalent (FTE) Increase (2015–17)

Largest Global Consulting Firms Europe’s Fastest-Growing Consulting Firms

Germany# x

x%xx


Sources: RocSearch Analysis

XYZ is likely to be advantageous over tier-1 firms on certain parameters such as cost effectiveness, turnaround time and flexibility

KEY DIFFERENTIATORS

COST EFFECTIVENESS TURNAROUND TIME INVOLVEMENT OF SENIOR STAKEHOLDERS FLEXIBILITY

AGILITY EMPLOYEE COORDINATION REGIONAL FOCUS BREADTH OF SERVICE

SPECIALISATION CAPACITY BRAND AND REPUTATION SCALE OF TASKS

PARAMETERS WITH RESPECT TO XYZ

HIGHLY FAVOURABLE MODERATELY FAVOURABLE NOT FAVOURABLE


XYZ has advantages in terms of cost-effectiveness, turnaround time and involvement of senior stakeholders

KEY DIFFERENTIATORS

PARAMETERS TIER-1 PLAYERS XYZ DESCRIPTION

Cost Effectiveness • Tier-1 companies have significant overhead costs, and thus are likely to charge higher prices for consulting, compared with

XYZ, that has a more competitive pricing

• Start-ups or smaller clients are more likely to hire XYZ, attributed to its cost effectiveness

Turnaround Time

• Expertise based consultants at XYZ can utilise their knowledge and competency to quickly gain traction on new projects

• On the other hand, new projects may require a steep learning curve for less experienced consultants at large firms, which canlengthen the time needed for project completion

• Clients are likely to hire XYZ for a shorter turn-around time project, as the larger firms are more inclined towards a long-duration engagement

Involvement Of Senior Stakeholders

• XYZ has a larger involvement of senior stakeholders throughout the project, that is likely to improve the overall quality andanalysis

• With a large firm, there is a possibility of having the project delegated to junior employees who have less experience, unless the client is a top brand with a large budget

Regional Focus

• Though tier-1 players have a larger pool of consultants and serve more geographies, technological advances have led to conducting presentations, interviews, virtual workshops and most other activities with thousands of participants around the globe

• However, there are instances when clients need simultaneous geographic reach, which might become difficult for a region-focussed firm

Breadth Of Services/ Specialization

• Tier-1 firms have a larger pool of services compared with the tier-3 firms

• Niche consulting firms usually focus on specific industries or business problems, thereby offering in-depth expertise in particular areas

Capacity • In lieu of on-going projects, tier-3 firms may not be able to accommodate a new project efficiently, due to their limited capacity

of professionals working on it



Agility and employee coordination can make XYZ preferred over other big consulting firmsKEY DIFFERENTIATORS


PARAMETERS TIER-1 PLAYERS XYZ DESCRIPTION

Digital Transformation

• Tier-1 companies are focussing more on digital transformation consulting by expanding their services portfolio and acquiring technology firms, and have also established separate digital brands such as BB Digital, Deloitte Digital or Bain Digital

• The big Four have acquired about 185 consulting firms during 2014–17, of which a half are active in the technology/digital space

• However, niche consulting firms are also focusing on Digital Transformation to hold on to the market demand

Flexibility And Innovation • Smaller tier-3 consulting firms, such as XYZ are able to target their efforts and tend to be more flexible

• By utilising their proficiency in specific subject areas they are likely to resolve issues more creatively

Brand & Reputation

• Larger firms, such as the Big Four have an advantage in terms of their brand image, and are likely to win more business basedon this parameter, compared with the smaller tier-3 and boutique firms

• Sometimes clients need a brand label associated with themselves to shore up their confidence when presenting to the board or to make their recommendations reliable

Agility • For XYZ, it will take a lesser time to alter ideas and processes throughout the entire consulting staff, in contrast to a bigger tier-

1 firm

• For a tier-1 firm, the process can be time consuming and expensive

Employee Coordination • XYZ’s consultants tend to work cooperatively rather than competitively, thereby producing synergies from collaboration

• In a smaller firm, employees usually work one-on-one or with a small consulting team, hence improving quality

Scale Of Tasks For A Project

• Some projects require a larger work-force to get tasks done, for e.g., for commoditised implementation projects such as implementing a new IP system or focus group sessions with about 2,500 people around the globe

• Larger firms are likely to be advantageous in such a scenario, due to their extensive capacity


The highest rates in the industry are charged by the ‘xx’, whereas the ‘yy’ offer lower fees for some services, attributed to large variation in their fee structure

FEES AND RATES (1/3)


0

xx

xx

xx

xx

xx

xx xx xx xx xx xx xx xx

Number of Consultants

Aver

age

Rev

enue

per

Con

sulta

nt (U

SD th

ousa

nd p

er y

ear)

Inde

pend

ent C

ontra

ctor

s

National/ Regional

Functional Specialists

Strategy Boutiques

Global Functional Specialists

Global Strategy Firms

Small & Mid-sized technology players Mid-sized

Accountants

Global Technology Firms

Big Four

• Highest rates in consulting are charged by ‘Global Strategy Consulting Firms’, such as BB, CC, BB, DD, YY and AA

─ They are followed by ‘Strategy Boutiques’ that have a national or regional focus

• ‘Global Functional Specialists’, such as XX, AB, AC, AD and AE, typically have revenue/consultant between USD xx–xx per year

• Strategy and management consulting practices of the ‘Big Four’ are at the top-end of their fee model, whereas lower hourly rates are billed by lower-value-adding services, such as accountancy, audit or operational disciplines within IT Consulting

• ‘National / regional functional specialists have rates similar to the Big Four, although their exact fee structure depends on their reputation, functional focus and service portfolio

• ‘Mid-size Global Accountants’, such as A, B and C, have varying rates compared to technology players, because of a full suite of service offerings, varying from accounting and tax to consulting and corporate finance

• ‘Global Technology Firms’ focus on IT Consulting services and include players such as X, Y and Z

• Annual fees of ‘Independent Contactors’ range from USDxxa year (for operational support) to about USDxx(for executive consultancy)

Consulting Fee Analysis1

Note: 1) The figure uses the revenues per consultant per annum as a proxy for average rates and the number of consultants as a proxy for firm size


Tier-2 and tier-3 consulting firms are able to maximise billing flexibility due to lower overheads and other expenses compared with tier-1 companies



Note: 1) The rates are ‘rack’ rates or pre-discount rates for tier-1 consulting firms; final rates depend on buyer’s negotiating power, project duration and competitiveness of suppliers in that region

Tier-1 US Management Consulting Average Billing Rates (USD/hour) – 2018

Service Line Partner Director Senior Manager Manager Senior Consultant Consultant Analyst

Strategy xx xx xx xx xx xx xx

Operations xx xx xx xx xx xx xx

Finance (BAS) xx xx xx xx xx xx xx

HR Consulting xx xx xx xx xx xx xx













US Management Consulting Billing Rates1 (2018)


Tier-2 and tier-3 consulting firms are able to maximise billing flexibility due to lower overheads and other expenses compared with tier-1 companies



Note: 1) The rates are ‘rack’ rates or pre-discount rates for tier-1 consulting firms; final rates depend on buyer’s negotiating power, project duration and competitiveness of suppliers in that region

Tier-1 UK Management Consulting Average Billing Rates (USD/hour) – 2018


















UK Management Consulting Billing Rates1 (2018)

Table of Contents




▪ Appendix 22


M&A strategy, digital transformation advisory, and AI and automation implementation strategy services are potential candidates for service extension for XYZ

OPPORTUNITY ASSESSMENT


Note: 1) The mentioned capabilities have been aggregated from the companies that have been top-ranked on the basis of differentiated service offerings2) The analysis is based on our understanding of XYZ’s capabilities

Product Strategy

Marketing & Sales IT Advisory Data AnalyticsGrowth

StrategyMergers &

AcquisitionsOrganizational

StrategyIndustry Analysis

Systems Integration

Application Development

ERP Implementation

Process Re-engineering

Target Operating Model

Operational Platform Streamline

CRM Strategy

Cyber Security Strategy

Cloud Strategy

Enterprise Architecture

Client-customised Analytics

Analytics Strategy

Business Performance

Product Development

Product Positioning

Brand Strategy

Target Customer Analysis

Pricing Strategy

Channel Strategy

Marketing Strategy

Sales Force Effectiveness

Organic Growth Planning

New Market Entry

Target Identification

Due Diligence

Integration Planning

Post-Merger Integration

Exit Support

Organisational Design

Regulatory Strategy

Corporate Governance

Talent Retention & Development

Industry Analysis & Insights

Competitor Benchmarking

Market & Revenue Pool Sizing

Economic Policy

CORPORATESTRATEGY TECHNOLOGY/ DIGITAL

SERVICES

DIGITAL STRATEGY/ TRANSFORMATION

Digital Readiness Assessment

Digital Governance and Sustenance

AI and automation implementation strategy

Digital Transformation Advisory

Digital Supply Chain Transformation

Enterprise Blockchain Strategy

SERVICES WITH RESPECT TO XYZ

EXISTING CAPABILITIES QUICK WINS

Product Segmentation


All of the XYZ’s existing operational locations are among the identified high potential markets; other potential expansion markets in Europe includes France, Spain and rest of Nordics

OPPORTUNITY ASSESSMENT

Source: consultancy.uk; consultancy.eu; consultancy.asia; consulting.us; Barnes Report 2017

Note: 1) Recommended markets for geographical expansion are the ones assessed highly attractive “marked in green” in at least three of the parameters in the relative company benchmarking section

• France

• Spain

• Denmark

• Sweden

• Norway

• Australia

• UAE

Suggested Markets for Expansion Suggested Markets for Geographical Expansion

High Potential and Suggested Markets for Expansion

Other Markets with XYZ’s Operational Presence

XYZ’s Current Office Locations

High Potential Market with XYZ’s Existing OperationsUAE

Denmark

Singapore

Table of Contents




▪ Appendix 22


Approach for Relative Country BenchmarkingAPPENDIX – APPROACH FOR RELATIVE COUNTRY BENCHMARKING

ATTRACTIVENESS TO INVEST HIGH MEDIUM LOW

INDICATORS AND RATING CRITERIA

GROWTH RATE (%) > 7 3–7 <4

DIGITAL EVOLUTION INDEX SCORE1 > 3 2–3 <2

EASE OF DOING BUSINESS RANKING Up to 49 50–99 >99

# OF MANAGEMENT CONSULTING ESTABLISHMENTS >100,000 10,000–99,999 <10,000

ICT DEVELOPMENT INDEX RANKING2 Up to 49 50–99 >99

Definitions:

1. Digital Evolution Index indicates the state and quality of digitalisation in a country by analysing 108 indicators measuring supply conditions, demand conditions, institutional environment, and innovation and change

2. ICT Development Index published by ITU measures the digital divide and compare ICT performance within and across countries


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GLOBAL CONSULTING MARKET - RocSearch

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