South Africa consultancy and business advisory market valued at R70 billion

20 November 2017 Authored by Consultancy.co.za

According to a report from an analyst platform, South Africa’s management consultancy and business advisory services market is worth more than R70 billion. The number of consultants, business advisors and business coaches exceeds 60,000.

Earlier this month, Consultancy.co.za presented an analysis from an analyst firm which revealed, among other trends, that the business and management consulting segment of the South African market is worth approximately R125 billion ($9 billion). Now, a report from a different research house projects that the segment is, in fact, much smaller, valued at R70 billion ($5 billion), with 60,000 professionals active in the arena.

The discrepancy reflects a fairly common trend in which substantially different valuations of the same consulting industry emerge from different sources. This stems from the ambiguity around the word consultant, and the various professionals that different sources attribute the title to. For example, while analyst firms like Source Global Research limit the market only to consulting firms with over 50 consultants, other analyst firms such as Statista or ALM expand the scope to include smaller firms, boutiques, and in some cases, even independent consultants in the management consultancy space.

Size of the South African consulting market

This report (R70 billion) works with data generated by the profiling of 40 firms that have a substantial presence in South Africa, including international strategic firms such as The Boston Consulting Group (BCG), McKinsey & Company and Bain & CompanyThe report also includes the services provided by the Big Four professional services firms Deloitte, EY, KPMG, and PwC, as well Accenture.

The study reflects a number of trends in the South African market and their impact on the consulting industry. A dip in gold and oil prices across the world has caused a significant slowdown in the South African economy for the last few years, particularly since after the financial crisis in 2008. A report by the same analysts in 2015 revealed that the Auditor-General of South Africa had called for a slash in public expenditure on consulting firms in order to cope with the growing pressure on the public purse. 

This directive has had its impact on the industry over the last two years. This year’s report shows that public service expenditure on consulting services has decreased by 12.6% in real terms between 2013 and 2016. However, a number of private actors in the country continue to hire the services of consulting firms, particularly the larger international firms.

Market share of consultancy firms in the South African consulting market

According to the 2015 report, 85% of the segment’s total revenues were generated through high-profile projects won by big consultancy firms. Moreover, a number of big firms are increasing their investments in the country. Earlier this year, KPMG South Africa signed a contract for a new R220 million office space, signifying their intent in the country. Last month, Accenture launched one of their Liquid Studios in South Africa, aimed at encouraging innovation and providing tailor-made solutions to companies across the country. 

However, not all big consultancies are thriving in South Africa. Aside from their development prospects, KPMG has seen trouble after being involved in a scandal involving Trillian: a consultancy run by the illustrious Gupta family, Eskom: an electricity supply company, and President Jacob Zuma. McKinsey & Company were also involved in the scandal, and both have begun to lose clients as a result.

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