Tax and tech demand push US consulting revenue over $63 billion

15 June 2018

Leading consulting firms raked in more than $63 billion in revenues from advisory services in 2017, a new record. Client spending on advisory shot up by 8.1%, bolstered by federal tax reform and demand for digital transformation services.

The Big Four and technology consulting firms were the most notable beneficiaries as US client spending on consultants hit a new record of $63.2 billion in 2017. Spending on digital transformation services shot up by 10.6% to $17.3 billion, while the Big Four’s consulting revenue rose 9.4% to $23.2 billion.

Figures come courtesy of Source Global Research. The UK-based research outfit’s latest report focuses exclusively on major consultancies that offer their services to clients with revenues exceeding $500 million. Total consulting revenue in the US is likely substantially higher once the thousands of smaller and independent firms are taken into account. ALM Intelligence has previously floated a figure as high as $93 billion.

Together, revenue from the consulting arms of the Big Four professional services firms – Deloitte, KPMG, EY, and PwC – and from digital/technology consulting by other firms, accounts for $40.5 billion. This equates to roughly two thirds of the total US market, which itself amounts to almost half of global consulting revenue.

A spike in consulting revenues collected by the Big Four was due in part to an overhaul of the federal tax system, said Fiona Czerniawska, director of Source Global Research. Signed by Donald Trump in December, the bill slashed the corporate tax rate from 35% to 21% and led to a flurry of client queries about how they could take advantage of the new regime.

Tax and tech demand pushes US consulting revenue over $60 billion mark

“It was one of the key drivers in 2017, but given that some of the tax changes were only announced late in the year, the actual impact in numbers was relatively small, but it has potential to grow much more in the future,” said Czerniawska. “Tax regimes around the world are diverging, so suddenly it’s a lot more complicated to be a multinational firm,” she added.

Not all of the Big Four’s increased consulting revenue was due to tax reform. The firms are also heavily involved in digital transformation and other technology consulting services. Revenue in this sector saw the greatest increase and the Source Global Research report indicates that the majority of strategy consulting now digital or technology related.

“Digital transformation is also one of the big drivers of growth across the market as a whole, and the Big Four are benefiting from a strong client interest in cybersecurity and risk more generally,” said Czerniawska.

Also embedded in the report is another story – that of the increasing competition between Big Four firms and technology consultancies over the lucrative digital transformation market. Geoff Vickrey, a performance improvement leader at EY, said “We’re competing against some strategy boutiques”, adding that “they’re trying to move into our space.”

Eclipsing $63 billion in revenues is virgin territory for the US consulting market. The $50 billion milestone was reached in 2014. Technology has been the fastest growing service line since 2015, and is closely interlinked with the booming trade in analytics consulting. The biggest spending clients continue to be found in the financial services and manufacturing sectors.

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Meghann Kelley leaves Deloitte to join law firm White & Case

11 April 2019

Meghann Kelley, formerly Deloitte’s legal management consulting leader, has left the Big Four firm to join international law firm White & Case, where she will assume the role of global director of strategic initiatives.

Much has been made of the Big Four’s incursions into the legal profession, as they seek to provide an ever expanding one-stop shop for business needs – a Walmart of the professional services world where you can pick up some marketing services when you initially drove over to have some new enterprise resource planning software implemented.

The Big Four have expanded their global attorney headcounts into the thousands, and are eyeing the further growth of their legal divisions. At stake is a potential $30 billion boost to their revenue via legal services.

Some of the large, international law firms have, in turn, responded by getting into the consulting industry. Allen & Overy last year launched a regulatory consulting business, invading the sector of advisory firms like FTI Consulting. Hogan Lovells, meanwhile, opened a "solutions" division to advise on cybersecurity, communications, and economic valuation. This trend means that law firms will increasingly suck in MBAs and techies in addition to their roster of JDs, as they broaden their offerings to head off some of the value proposition of Deloitte, PwC, EY, and KPMG.Meghann Kelley leaves Deloitte to join law firm White & CaseNew York-based White & Case has also expanded its offerings into consulting areas, delivering data, privacy and cybersecurity services, as well as project development and finance consulting. “When we work with our clients on these projects, we provide more than just international and, in many cases, local legal advice,” states the firm’s webpage for its project development practice. We provide business, strategic, and cultural advice in assisting our clients in structuring, negotiating, and documenting the full array of project and financing agreements tailored to each client's needs and the customs of the local jurisdictions.”

Legal giant White & Case has more than 2,000 lawyers and 4,500 total employees in 25 countries Previously, Deloitte’s legal management consulting leader, the addition of Kelley will bring deep legal consulting insights from 15 years spent at one the Big Four’s foremost firms.

Kelley was also previously the chief strategy officer of Deloitte’s tax and legal practice in the UK. Prior to that, she served as strategic priorities leader in the practice. 

The high-profile recruitment was conducted by executive search firm The Alexander Group. The search was completed by managing director John Lamar and director William Lepiesza.