• Financial services consulting work hits US$1bn for the first time and overtakes energy to become Australia’s biggest buyer of consulting

• Consulting work indicates the economy has started its transition from mining to services

• Public sector work up 7.5 per cent to US$786m ...

The Australian consulting market grew 4.4 per cent to US$4.4.bn in 2015 - almost doubling its speed of growth compared to the previous year (2.4 per cent). A buoyant performance from financial services and the public sector went some way to balancing the negative growth in Australia’s beleaguered energy & resources industry – where consulting activity dropped 0.7 per cent in 2015 to US$1.02bn.

The financial services industry has now overtaken the energy & resources sector to become Australia’s biggest buyer of consulting services, growing 6.8 per cent to hit US$1bn for the first time. This industry now comprises almost a quarter of the Australian consulting market, and in 2015 it also recorded the third largest growth - with regulation and digital driving a steady stream of work for consultants. The strength of demand for consultants in this sector indicates the economy has started its transition from mining to services.

The big accounting firms benefited most from the surge in financial services work as they expanded their market share by 12.8 per cent to US$1.84bn. In contrast, the Strategy firms, who were the next best performing group of firms, only grew 3.4 per cent to US$548m.

These findings, published today in a new report from the leading global consulting market analyst firm, Source Global Research (Source), also found growth in the public sector outperformed 2014, increasing 7.5 per cent to US$786m. Public sector clients are continuing to make headway on reforms, despite a volatile political environment, and consultants wasted no time in embedding themselves in these bigger programmes of work. The report explains that state governments, separated by vast distances, are looking to connect to obtain efficiencies from centralisation by using digital and cloud technologies.

Edward Haigh, Director at Source Global Research said:

“Political uncertainty has a long history of cooling consulting markets, and consultants are all too aware of the potential for it to do so in Australia. But perhaps there’s something about this particular government, currently clinging to power by its finger tips following the narrowest of victories in the recent general election, on which consulting looks particularly favourably. Certainly Malcolm Turnbull, a former lawyer, merchant banker, and venture capitalist seems just about as consultant-friendly as anyone who’s held power in Australia for some time.”

Neil Plumridge, Managing Partner at PwC, added:

“In mid to late 2015, the public sector was strong. Most governments were very positive about new policies and getting on with change and were keen to address the fact that there's been a lot of underinvestment in technology in recent years. They were also looking for new ways to find efficiency savings and taking a lot of lessons from the UK in this respect in terms of contestability and outsourcing.”

Tech consulting records strong growth as digital continues to dominate…

Technology remains the most buoyant consulting service line in Australia, recording 5.8 per cent growth to US$1.37bn in 2015. Clients are looking for support on a large range of initiatives; digital, ERP, agile, and cloud are all keeping consultants busy. This has been supported by the improvement of technology infrastructure across the entire country. The report says that 2015 witnessed a discernible shift in the mindset of consulting firms. Following the initial rush on digital, firms are now educating clients on the benefits of a structured and considered approach to technological change.

Roy Barden, Regional Practice Leader - Asia Pacific at The Hackett Group told Source:

“We're seeing a lot of technology-driven change. That's already happened in Finance, but many of our clients are coming from HR functions now. Every employee touches technology now, and HR systems have to work at scale and in environments - like mines and supermarkets- that aren't always easy. That means making HR processes available on mobile devices.”

Digital skills in demand…

Talent shortages and digital skills, in particular, are badly needed and hard to source. Firms are even facing a shortage of people ready to meet clients’ implementation demands. Source reports the people shortage isn’t necessarily translating into opportunities for the newly trained as the most-needed skills tend to come from years of professional experience.

Edward Haigh from Source concluded:

“2016 is shaping up to be an interesting year. The political landscape remains volatile, but the impact could be limited as both clients and consultants have become accustomed to forging ahead despite uncertainty. Overall, we expect to see modest but continued growth over the next two years.”

For more information on Source reports contact alice.noyelle@sourceglobalresearch.com or telephone +44 (0)20 3795 2668/ visit www.sourceglobalresearch.com.

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