Editor’s note: The rapid changes in emerging technologies compel benchmarked vendors in Technology Business Research’s Management Consulting Benchmark report (Deloitte, PwC, Ernst & Young, IBM and others) to acquire or partner to remain competitive.

HAMPTON, N.H. – Rapid changes in emerging technologies force management consultancies to acquire or partner to help clients modernize business models

Annual revenue for the 16 firms in Technology Business Research, Inc.’s (TBR) recently published Management Consulting Benchmark increased 6.5% year-to-year in 2015, reaching $77 billion, while overall IT services market revenue contracted 6.9% over the same time frame.

TBR estimates revenues as:

  • Deloitte, $9.3 billion, 56% market share
  • PricewaterhouseCoopers $3 billion, 18.1% market share
  • Ernst & Young $2.3 billion, 13.8 percent market share
  • Others $1.99 billion, 12 percent market share

As clients increasingly adopt cloud, analytics and digital technologies, operations models are changing, creating opportunities in Operations Consulting, the core of management consulting, at 44% of the $37.5 billion management consulting benchmarked revenue in 1H15.

According to TBR Principal Analyst Patrick M. Heffernan, “Vendors successful in linking the implementation of emerging technologies with business decisions for clients will continue to win engagements in 2016.”

The rapid changes in emerging technologies compel benchmarked vendors to acquire or partner to remain competitive.

McKinsey’s 2011 acquisition of Henry Rak Consulting, an analytics boutique serving retail clients, appeared to be an outlier, as strategy-centric firms rarely made acquisitions and emerging technology capabilities did not fit seamlessly into the highest end of consulting services.

By the end of 2015, however, the acquisitions pace set by McKinsey, BCG, KPMG and their peers illustrated how McKinsey’s move was the start of a market-shifting trend.

While management consultancies have consistently acquired smaller consulting firms that typically fold neatly into firms’ capabilities and strengths, large purchases such as Deloitte of Monitor or PwC of Booz & Company have occurred. In the last 12 months, McKinsey and BCG stood out for their strategic shift to build emerging technology capabilities, especially in analytics and digital transformation, helping them compete across a broader consulting spectrum.

Similarly, many of the benchmarked consultancies entered or enhanced alliances designed to align deeper technology capabilities with core consulting offerings.

Deloitte’s partnership with Accenture Duck Creek indicates Accenture’s willingness to be a software partner — even to a traditionally fierce competitor. As multiple management consulting executives noted to TBR, the pace of change in technology and innovation has forced consultancies to partner or acquire more rapidly and with more agility, or risk falling behind.

Note: Heffernan will present high-level findings from the 1H15 Management Consulting Benchmark in TBR’s webinar Operations is the link between management consulting and emerging technologies, compelling vendors to invest in people and IP, Feb. 25, 2016, at 1 p.m. EST.

The Management Consulting Benchmark covers Accenture, Aon Hewitt, A.T. Kearney, Bain & Company, BearingPoint, Boston Consulting Group, Capgemini, Deloitte, EY, IBM GS, KPMG, Oliver Wyman, Mercer, McKinsey & Company, PwC and Towers Watson.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact heather.waters@tbri.com.