Market Share Analysis: Consulting Services, Worldwide, 2011

Key Findings

• The worldwide consulting services market grew 11% to nearly $83 billion in 2011, from $74.8 billion in 2010 (7.3% in constant currency).
• Deloitte remains the top player in 2011 for consulting services, with 6.1% market share.
• The average growth of the top 10 global consulting providers was 13.9%, which was above the market growth of 11%.
• The top 10 providers for consulting services represent 36.3% of the total consulting market, based on 2011 revenue estimates.
• A shift in the demand from organizations to interlink business issues to technology has benefited consulting firms with both business and IT consulting capabilities, as demonstrated in the growth performance of firms such as Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young and Accenture. This shift is also seen from the types of mergers and acquisitions (M&As) that have been made during the past three years.
• There was robust growth performance — double-digit growth rates — in Asia/Pacific and Japan across most of the top 10 consulting service providers, as investments flowed into the Asia/Pacific region; slowed growth was experienced from the U.S. and Western Europe.
• Asia/Pacific's growth was derived not just from China (31% growth), but also from the mature Asia/Pacific country markets of Singapore (22.4% growth), Australia (21.4% growth) and the emerging country markets of India (25.8% growth), Malaysia (19.8% growth) and Indonesia (18.6% growth).
• CSC is the new entrant to the top 10 consulting service providers list, based on Gartner estimates for global consulting revenue. CSC moved up from the 12th position in 2010 to the 10th position in 2011. PwC exchanged position spots with IBM, moving up to second position, and IBM is now placed at third position. Capgemini also moved up from 10th position to ninth position.
• SAIC, which was among the top 10 list in 2010, dropped three positions to 12th, with a negative growth of 2.7%.
• The top 40 list showed good traction growth from three IT services providers: NTT Data, Cognizant and Tata Consultancy Services (TCS). NTT Data grew by 122.2% (aided by its strong acquisition strategy in 2011), Cognizant grew by 33.9%, and TCS grew by 31.5%.

Table 1 provides an overview of the worldwide consulting service market.

Source: Gartner (April 2012)

Overall Market Segment Performance Analysis

Gartner's most recent publication on market share data for consulting (see "Market Share: IT Services, 2011") shows that the total worldwide consulting market increased 11% from $74.8 billion to nearly $83 billion (7.3% in constant currency).

2011 was a buoyant year for most consulting providers, with double-digit growth rates emerging from Asia/Pacific and Japan, as investments flowed in from North America and Western Europe. Notably, growth was seen not just coming from China, but also coming from the mature Asia/Pacific country markets of Singapore, Australia and the emerging country markets of India, Malaysia and Indonesia.

Business issues interlinked to technology issues have become a central focus with organizations. Hence, consultants with strong business consulting capabilities, coupled with IT consulting capabilities and deep vertical expertise, such as Deloitte, Accenture, KPMG, PwC and Ernst & Young, are benefiting from this demand, and their positive growth performance have demonstrated the demands of strong consulting capabilities. The nature of the type of M&A activities also demonstrate the direction of these firms to meet the increased demand for resolving business issues from clients.

SAIC, which was in the top 10 consulting provider list in 2010, has dropped three positions from 2010's ninth position. SAIC is very focused on selling into the U.S. federal governments and utilities. The softened economic conditions in the U.S. and the faster growth of the other 10 competitors in the 2011 ranking list impacted SAIC's positioning in the overall consulting service landscape.

Consulting services are advisory services to help companies analyze and improve the efficacy of business operations and technology strategies. Consulting services include two subsegments: business and IT consulting. Business consulting services are limited to business-process-driven consulting services that typically preface, enable or influence the adoption of IT. These business consulting services include business process transformation, business process redesign or re-engineering, business performance improvement, and business process consulting related to corporate compliance, risk management or governance. IT consulting services are advisory services that help clients assess different technology strategies and, in doing so, align their technology strategy with their business or process strategy. These services support customers' IT initiatives by providing strategic, architectural, operational and implementation planning.

Gartner's reporting coverage by region has changed for 2011, with the most significant differences arising from the Asia/Pacific regions. Asia/Pacific now encompasses three subregions: mature Asia/Pacific region, Greater China, and emerging Asia/Pacific region. The new regional makeup of country markets for the mature Asia/Pacific region includes Japan, Australia, New Zealand, Singapore and South Korea. The emerging Asia/Pacific region includes the country markets of India, Indonesia, Malaysia, Thailand and the rest of Asia/Pacific. The Greater China region encompasses the country markets of China, Hong Kong and Taiwan.

Top Vendors Analyzed

Based on Gartner's annual consulting provider market share research, the top 10 vendors accounted for 36.3% of the global consulting market, and they saw an average growth of 13.9% consulting spending from 2010 to 2011, which was above the market growth of 11%.

The same providers that dominated the global consulting market in 2010 also dominated this market in 2011, with the exception of CSC, which moved up the list to the 10th position, at the expense of SAIC, which dropped from 10th in 2010 to 12th in 2011.

We provide a brief analysis of the performance of the top 10 consulting providers in 2011 revenue rank order, as shown in Table 1.

Deloitte

Deloitte holds its position as No. 1 for consulting services globally, with a consulting service market share of 6.1% in 2011, with $5.1 billion in 2011 and $4.4 billion in 2010, at a growth rate of 14.3%. The North American region remains Deloitte's largest revenue contributor, at 49.3% of Deloitte's overall 2011 revenue, followed by the Western European region at 28.4%, and Asia/Pacific and Japan region at 14.4%. More than half (57.9%) of this Asia/Pacific and Japan revenue is derived from the mature Asia/Pacific country region.

Double-digit growth rates are reported across every region and country. Deloitte's fastest-growth region is the Greater China region, at a 25.5% growth rate in 2011, with its fastest-growth country in this region being China. Following very closely in terms of fastest regional growth is the emerging Asia/Pacific region, with a growth rate of 22.6%, with its fast-growth country in this region being India. Deloitte's top-performing growth rate countries are all from the Asia/Pacific region: China, India, Singapore, Indonesia, Australia and Malaysia. Both organic and inorganic growth factors have contributed toward Deloitte's healthy growth rates, in addition to its business model evolution to include a more aggressive position in capturing strategic businesses in business intelligence (BI), analytics, mobility solutions, software as a service (SaaS) and targeted vertical expertise, such as real estate and life science capabilities. The softened European markets in 2011 have not affected this consulting firm.

PricewaterhouseCoopers

PwC moved up one position from the previous year's ranking and is now at second position in the overall global consulting services list. It picked up 0.4 market share points from 2010 and had an overall growth of 20.9% for consulting services. PwC's 2011 consulting service market share is at 5.2%, with 2011 consulting revenue of $4.3 billion and 2010 consulting revenue of $3.6 billion. The regions of North America and Western Europe remain PwC's stronghold, with contributing shares of 38.2% from North America and 34.1% from Western Europe. PwC's next-largest contributing region is from the Asia/Pacific and Japan region, at 16.6%. PwC's fastest-growth region is the Greater China region, at 31.7%.

All of PwC's regions and countries reported double-digit growth rates, with its fastest-growth countries emerging from the Asia/Pacific region: China, India, Singapore and Indonesia. The softened European business environment did not dampen the growth of PwC's Europe-based businesses. PwC is focused on selling the upfront strategy consulting services. It has gained traction to strengthen its BI and analytics to complement its strategy consulting — especially in the areas of finance, risk, sustainability and performance management services, all of which have contributed to its success. PwC's acquisitions, such as PRTM and Diamond Management & Technology Consultants, also contributed to its accelerated overall growth in operations and technology consulting.

IBM

IBM, dropping one rank from 2010, is placed in third position in the overall 2011 consulting service market share listing. IBM has an overall consulting market share of 4.9%, a drop from its 2010 market share of 5.4%. IBM's consulting revenue was $4.1 billion in 2011 and $4 billion in 2010. Asia/Pacific and Japan is IBM's regional stronghold for its global consulting services, at 40% contributing revenue, with the majority of this revenue coming from Japan, Australia and China. IBM's next-largest region is North America, at 31.5% regional contribution.

IBM's regions and countries had a mix of positive and negative growth rates. Both North America and Western Europe regions had negative growth rates. IBM's fastest consulting service growth country markets are New Zealand, Australia, Russia, China and Hong Kong. IBM's strategy has been focused on aggressively acquiring software firms, enabling it to increasingly bundle consulting services with its portfolio of software solutions.

Ernst & Young

Ernst & Young (EY) remains in fourth position in the overall consulting service market, with a 2011 market share of 4.4%. Its consulting service revenue was $3.6 billion in 2011 and $3.1 billion in 2010, with a growth rate of 16.5%. Two of EY's largest regions are Western Europe and North America, with 35.9% and 34% contributing regional share, respectively. Asia/Pacific and Japan contributed 17% of EY's overall revenue.

All of EY's regions and countries, with the exception of Greece, experienced double-digit growth rates. EY's fastest-growth regions are the Greater China region, at 25.3%, and the emerging Asia/Pacific region, at 24.8%. Its fastest-growth countries are all from the Asia/Pacific region: China, India, Singapore, Indonesia, Australia and Malaysia. EY's country markets for Latin America also grew at an average rate of 21%. EY's acquisitions focus on building up stronger analytics and BI capabilities for enriching its service offerings.

Accenture

Accenture retains its fifth position ranking as it grows with the entire consulting services market. It achieved consulting revenue of $3.2 billion in 2011 and $2.6 billion in 2010, at 3.9% market share, with a year-over-year growth rate of 22%. Accenture grew the fastest across the top 10 consulting service providers featured in this document. For consulting services, Western Europe remains Accenture's stronghold, with a regional contribution of 39.4%, followed by North America at 34.1%, and the Asia/Pacific and Japan region at 22.5%.

All the regions and countries, with the exception of Greece and Russia, experienced double- digit growth rates. Accenture's fastest growth region is the Greater China region, with a growth rate of 66.2%, the majority of which came from Hong Kong and China. Accenture's significantly fast-growth country markets came out of the Asia/Pacific region: Hong Kong, Indonesia, India, China, Thailand, Malaysia, Taiwan, Australia, New Zealand, South Korea and Singapore. Accenture's healthy growth was driven by its acquisition strategy and aggressive activities in the verticals of utilities, communications, insurance, retail, banking and securities, and governments. Accenture provides a full suite of business and IT services, brought to market via a very coherent approach, helping to provide consistency for clients along the value chain.

KPMG International

KPMG retains its sixth position. KPMG's consulting service revenue was $2.9 billion in 2011 and was $2.4 billion in 2010, with a year-over-year growth rate of 21.2%. Its 2011 consulting market share is 3.5%. KPMG is the second-fastest growth firm across the top 10 consulting providers featured in this report. Western Europe remains KPMG's stronghold, with 45% regional contribution, followed by North America with 23.4%, and Asia/Pacific and Japan with 19.8%

None of KPMG's countries experienced negative growth rates, and there is a mix of double-digit and single-digit growth rates. Unlike many of the top 10 listed in this report, whereby the fast-growth countries are dominated by Asia/Pacific country markets, KPMG's fast-growth regions and countries are better spread out. KPMG's fastest-growth region is Latin America, at 36.8%, and North America followed, at 29.8%. Its fastest-growth countries suggest a quick upturn from smaller bases of revenue, such as Turkey, Indonesia, New Zealand, Colombia, Mexico and Argentina. More significant growth countries are from China and the U.S. As KPMG is a Big Four accounting firm, its consulting strengths lie in its strategy and business consulting services. However, it also has a strong sourcing and outsourcing consulting team (specifically from its acquisition of EquaTerra), and it will provide IT consulting and IT implementation services. KPMG has also been ramping up its alliance strategy to bring to market a broader set of services.

Booz Allen Hamilton

Booz Allen Hamilton maintains its seventh position. Its consulting service revenue for 2011 was $2.5 billion and $2.3 billion in 2010, with a growth rate of 7.5%. Its consulting service market share is 3%. Booz Allen Hamilton's largest contributing region is North America, at 66.9%. Western Europe contributes 18.4%, and Asia/Pacific and Japan contributes 11.4%.

Its fastest-growth region is from Greater China, with a 19% growth rate. Booz Allen Hamilton's fastest-growth country is China. Booz Allen Hamilton's vertical strengths in its fastest-growth region are from transport and government. Booz Allen Hamilton's forte is in its strategy, business and technology consulting services.

McKinsey & Co.

McKinsey & Co. retains its ranking at eighth position in consulting services. It held a 1.9% market share in 2011 for consulting services, with $1.6 billion in 2011 and $1.4 billion consulting service revenue in 2010, with a 13.6% growth rate. The regional share gap between its two largest contributing regions is narrowing, with North America at 39.9% and Western Europe at 36.3%. Asia/Pacific and Japan region contributes 16.1% of McKinsey & Co.'s overall consulting service revenue.

All of McKinsey & Co.'s regions and countries experienced double-digit growth rates, with the exception of the U.S. and Greece. Its two fastest-growth regions are Greater China, at 20.8%, and Latin America, at 19%. McKinsey & Co.'s fast-growth countries are from Asia/Pacific: China, India, Singapore, Indonesia and Australia. The nature of McKinsey & Co.'s business is in the strategy and business consulting services arena that is complemented by its emerging McKinsey Solutions business.

Capgemini

Capgemini jumped one position, from 10th in 2010 to ninth in 2011. Capgemini's 2011 consulting service market share is 1.8%, with $1.5 billion consulting revenue in 2011 and $1.3 billion in 2010, and a 17% growth rate. Western European revenue contribution dominates at 71.2%, while North America has a regional contribution of 18.4%. Latin America follows with a 5.3% regional share.

Latin America is Capgemini's fastest-growth region, at 291%, from a smaller revenue base in 2010 at $20 million. Capgemini's fastest-growth country is Brazil; this growth is in line with Capgemini's acquisition of CPM Braxis. Most of Capgemini's regions and countries grew at double-digit growth rates, including its two mature countries of France and the U.S. The U.K. grew by 6.4%.

CSC

CSC jumped two positions, from 12th in 2010 to 10th in 2011, with a growth rate of 2.7%. CSC has a 1.6% market share in 2011, with $1.29 billion consulting revenue in 2011 and $1.26 billion consulting revenue in 2010. Its largest region is still North America, contributing 57.2% of its overall consulting service revenue. Asia/Pacific and Japan is CSC's best-performing region, with a 14.2% growth rate, while Western Europe experienced a 4.1% decline.

CSC's fastest-growth countries are India, China and Indonesia. CSC's performance for all Western European country markets that it is in experienced negative growth rates.

Other Notable Providers

The following groups of IT services providers are noteworthy:

• Japan-based service providers — The firms are still predominantly offering IT consulting services. NTT Data grew 122.2% in 2011, notably from its aggressive acquisition strategy since 2010. It had acquired Value Team, Intelligroup, Extend Technologies, Cornerstone Asia, Keane and Business Formula. NEC, with its subsidiary, Abeam Consulting, grew 11.9%, and Fujitsu grew 8.6%.
• European service providers — Although 2011 was a challenging year for most Europe-based IT services providers, these service providers were still growing: Atos acquired Siemens IT Solutions and Services in 2011 and grew 2.8%; T-Systems grew 7%; Logica grew 4.8%; BearingPoint grew 9.1%; and PA Consulting grew 7.5%.
• India-centric service providers — These consulting providers would have a smaller presence of business consultants as compared with the consulting providers found in the top 10 list, but they are dedicated to invest in consulting services. Cognizant grew 33.9%, TCS grew 31.5%, HCL Technologies grew 25.5%, Infosys grew 18.5%, and Wipro grew 16.3%.
• IT product vendors — Software firms are increasingly offering consulting services to complement their products and are experiencing solid growth rates. SAP grew 15.2%, Dell grew 9.4%, Oracle grew 6.7%, and Microsoft grew 6.3%.

Mergers and Acquisitions

Table 2 shows the M&A activities of the top 10 providers in the consulting service market from 2009 through 2011. Most consulting service providers were on an aggressive acquisition path to quickly gain skills, new capabilities and new geographies.

Source: Gartner (April 2012)