I just got my copy of the Canadian Management Consulting (CMC) Industry Trends and Outlook report and thought I’d give everyone a quick version in case you didn’t receive one or haven’t had a chance to dig in.
In case you are not aware, the Industry Trends and Outlook report is a study conducted by CMC-Canada annually. It’s an amalgamation of input provided by CMC survey responses from members across Canada, representing all types and sizes of management consulting firms from those with just a single resource to others with 100+ staff. The report also includes the commentary and information provided via interviews with industry thought leaders from the biggest MC firms in Canada (including an interview with Sonya Strong, VP Solutions, Sierra Systems). The data is analyzed in detail within the report but here are a few highlights:
The MC industry as a whole made solid gains, growing to an estimated $10 Billion, up from $9.2B in 2010.
Market Results and Outlooks
63% of the management consulting market resides between Ontario (44%) and Quebec (19%) with the remaining bulk disbursed between Alberta (15%), BC (12%) and the remaining 10% scattered amongst the remaining provinces. As it relates to market optimism for the future, the Prairies are the most upbeat with 76% believing that they will finish higher than last year. In Atlantic and Pacific Canada approximately 66% expect year-over-year growth, while Ontario and Quebec are less optimistic about increases this year.
Revenues, Rates and Profit
Revenues are becoming more concentrated due to scale advantages, changing procurement practices and industry consolidation through mergers and acquisitions. The largest firms, with over $250M in revenue, represent 70% of the market. Utilization and productivity are improving at the largest firms with only 20% reporting less than 30% gross margin; however, the proportion reporting greater than 50% gross margin still remains far short of the 2009 levels (6% vs 29%).
The majority of mid-sized firms (10-99 full-time consultants) had less than 5% voluntary turnover with only 14% of large firms (100+) reporting turnover in excess of 15%. Almost all firms said that they prefer to hire experienced management consultants with the majority of student hires being from the largest firms who actively conduct on-campus recruiting. 63% of the largest firms (100+) have cited mergers and acquisitions as their largest source of new talent.
The private sector saw the biggest year-over-year improvement with 59% of respondents reporting double-digit revenue increases. Financial services (28%) and resources (25%) accounted for more than half of the private sector spend. In the public sector, federal spending was up 7% while provincial, territorial and municipal spending was down 9% overall. Information Technology is still the dominant share of MC industry revenues at 46%.
Outlook for the next 24-36 months
Confidence in the Western Canadian markets is the strongest, particularly in Alberta and Saskatchewan; in contrast to Ontario where pessimists outweigh optimists. Consultants see large opportunities in industry restructuring, large-scale transformation, big data analytics, cloud and mobile, risk consulting and human capital management. Forecasts are somewhat more bullish for HR and IT than marketing or finance. Overall the highest growth expectations are in energy and health care. 92% see targeted hiring as the primary growth strategy to add capacity, expand relationships and broaden/deepen capabilities. 70% of large firms (100+) expect to undertake major transactions including mergers and acquisitions, joint ventures or alliances.
For relationship building, presentations at third-party events and thought leadership publications are still considered the most effective way to engage with our target audience. LinkedIn is now the most popular channel, used by 88% of firms, well ahead of all other social and digital media.
Copies of the full report can be purchased from CMC Canada http://www.cmc-canada.ca.