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Industry Overview: There Are Four Major Types of Consulting 1. 2. 3. 4

The consulting industry has grown significantly since its origins in the late 19th century when firms first studied manufacturing to improve productivity. It is now a $470 billion global industry, with management consulting being the largest segment. Consulting providers range in size from large multinational firms to single consultants. The industry is impacted by factors in the external environment like economic and technological changes. Porter's 5 Forces model indicates high competition between large and niche firms for clients.

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Vaishnavi Khandelwal
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124 views5 pages

Industry Overview: There Are Four Major Types of Consulting 1. 2. 3. 4

The consulting industry has grown significantly since its origins in the late 19th century when firms first studied manufacturing to improve productivity. It is now a $470 billion global industry, with management consulting being the largest segment. Consulting providers range in size from large multinational firms to single consultants. The industry is impacted by factors in the external environment like economic and technological changes. Porter's 5 Forces model indicates high competition between large and niche firms for clients.

Uploaded by

Vaishnavi Khandelwal
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INDUSTRY OVERVIEW

The roots of modern consulting began in the late 19th and early 20th centuries, when
the first consulting businesses established in the United States studied manufacturing
in an attempt to improve workplace productivity. Many companies began hiring
consulting firms to help improve worker and production efficiency. Since then, the need
for services has grown with the population and the expansion of business on an
international scale, while the types of services provided have evolved with the economy.

Consulting industry comprises companies, independent contractors, and organizations


that are operating in HR, IT, Strategy, Operations Management and Business advisory
services

Today, consulting is a massive, international industry with global revenues of $470


billion in 2016, according to Plunkett Research, Ltd., up from $415 billion in 2013. This
figure includes human resources, business advisory services, information technology,
and operations management consulting, but not tax- and other accounting-related
consulting. There were about 739,000 management consulting firms in the United
States in 2016, according to IBISWorld, with combined annual revenue of approximately
$253 billion. Consultants are key players in the business world, and their star will only
rise in the future.

Consulting providers can be large firms (such as McKinsey & Company, Accenture,
Mercer, and the Boston Consulting Group) that maintain offices throughout the world,
small- to medium-sized businesses with local or regional presences, or firms operated
by only a few people or even a single consultant.

THERE ARE FOUR MAJOR TYPES OF CONSULTING

1. Management/strategy consulting firms


2. Financial consulting firms 
3. Information technology (IT) consulting firms
4. Human resources/staffing consulting firms
PESTLE ANALYSIS OF CONSULTING INDUSTRY
Factors arising from the external environment such as the changes in economy and lack
of innovation investment normally have an impact on the strategic options available to
the consulting companies.

Elements of Pestle Analysis


The Social Element of the environmental factors describes the societal elements that
the consulting company deals with in every market such as the population's age
distribution, religion, demographics, lifestyles and education. Consultants within the
consulting industry must at all time take into consideration the social factors in the
market as the social environment may cause havoc on an already established strategic
plan. A careful monitoring of the trend in the society results to the arrival of the correct
conclusions.

The Technological Environment affects the consulting industry in that, changes in


technology determines the value of services that consultants offer to their clients.
Analysts normally measure and monitor the changes in the technical environment and
the effects of the changes depending on the respective product development strategies.
Depending on how the consulting industry is driven by innovation, the task may take
several years to conduct.

The Economic Environment contains the aspects that consultants require to offer
their consulting services based on the economic conditions. The consulting company
must properly access the reaction of their clients when there are some economic
changes in the environment and adjust the strategies that they employ so that they
could remain competitive given the circumstances.

The Ecological Environment refers to the present day situations of both the
biological and physical environments that the Consultant Company can face. The
consultant company should pay attention to the ecological environment of the country or
countries that it is offering its services to due to the fact that if the company operates
without the correct information, the consultant company may be fined or denied the
chance of operating within some identified areas around the globe.
The Political or Legal Environment requires consultants within the consulting
industry to understand the political and legal environments available within the regions.

PORTER 5 FORCES OF CONSULTING INDUSTRY


MEDIUM THREAT OF ENTRY Low customer switching cost, low initial capital
investment but the factors of an experienced knowledgeable workforce and a
success track record dictate the success of the firms.

LOW POWER OF SUPPLIERS This force is defined by the easy availability of


MBA Graduated and experienced consultants. Other suppliers like the Software
Product Vendors often seek integration of their products within consulting firm’s
suite.

HIGH POWER OF BUYERS The Clients of Consulting companies always have


an option in-housing experienced professional from the market or maintaining the
status quo unless change is inevitable.

MEDIUM THREAT OF SUBSTITUE In Line with the buyer power, the threat of
substitute is relatively medium.

HIGH FIRM RIVALRY Bigger Consulting Firms competing for the same fortune
500 clients, smaller niche consulting firms pursuing business with clients in
respective verticals all lead to high competitive rivalry within groups.
ABOUT ORGANISATION-MILLIMAN
Milliman is among the world’s largest independent actuarial and consulting firms.
Founded in Seattle in 1947, Milliman has offices in key locations worldwide. Through
consulting practices in employee benefits, healthcare, investment, life insurance and
financial services, and property & casualty/general insurance, Milliman serves the full
spectrum of business, financial, government, union, education, and nonprofit
organizations. In addition to consulting actuaries, Milliman’s body of professionals
includes numerous other specialists, ranging from clinicians to economists. It has
offices in Mumbai and New Delhi.

Top 3 Milliman competitors:

1. Oliver Wayman
2. Towers Watson
3. Mercer Consulting

Company size - 1001-5000 employees


Headquarters - Seattle, WA
Type - Privately Held
Founded - 1947
Specialties - Healthcare consulting, Life insurance and investment consulting,
P&C/general insurance consulting, and Employee benefits consulting

SWOT ANALYSIS

STRENGTHS
1. They are the world's largest providers of actuarial and related products and services.
2. They have 50+ offices worldwide
3. It is one of the older consultancies in the world
4. They have a strong workforce of over 2500 employees

WEAKNESSES
1. Still haven't established themselves as the most superior consulting compared to
industry leaders
2. They have lesser brand recall vis-à-vis their competitors

OPPORTUNITIES
1. The emerging economies can provide immense opportunity.
2. They have great opportunities if they acquire other firms with similar synergies.

THREATS
1. The economic global recession is a threat to Milliman Consulting.
2. The competition from newer consultancies and growing established brands

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