The Management Consultancy & Business Advisory Services Industry in South Africa 2022

Introduction

The management consulting and business advisory services industry forms part of the knowledge industry.

The sector has been affected by the pandemic, which limited in-person consultations and travel and resulted in a number of clients cancelling projects, as well as allegations that several big management consulting firms, including McKinsey & Company and Bain & Company, were implicated in corruption by the state capture enquiry. Some mid-tier and boutique management consultancies have been able to capitalise on the crisis. Demand for consulting and business advisory services is rising, driven by clients looking for help with digital transformation, which increased during the pandemic. Enterprise and supplier development (ESD) and turnaround and business rescue consulting also represent growing opportunities for business consultants. Knowledge management is becoming increasingly driven by digital tools.

Opportunities

Demand for digital transformation solutions is growing, fuelled by the pandemic.

Demand is growing from companies for digital marketing, sustainable business solutions and help meeting health and safety regulations. Enterprise and supplier development (ESD) has been identified as a growing opportunity for business consultants. Increase use of freelancers is opening up opportunities for smaller firms. New standards for business advisors who consult for incubators and accelerators could increase the value of this service. The development of new knowledge management solutions for digitally transformed organisations. There is high demand for business rescue and turnaround solutions, driven by the pandemic. With companies expanding their operations across Africa and to other parts of the globe, there are opportunities for consultants to establish a presence in markets where their clients are represented.

Outlook

The image of management consulting has been negatively affected by scandals in connection with state capture.

Despite this, the current growth prospects for the management consulting and business advisory sector in South Africa appear sound, believes IQ Business CEO Adam Craker, who says his own company has grown sales at 15% to 20% per year over the past five or more years. SNG Grant Thornton national head of business consulting Yugen Pillay says work for consultants has picked up in 2022 compared to the previous two years, and consultants are expected to benefit from opportunities in business transformation, strategy and financial services. Nonetheless, a brain drain of skilled consultants and low economic growth remain key challenges. In a January 2022 survey of 365 knowledge management professionals by US benchmarking organisation American Productivity & Quality Centre, more than two-thirds of participants stated that their organization's plan to increase knowledge management investments over the next year or more.

Report Coverage

This report focuses on management consulting and business advisory services including knowledge management in South Africa.

It includes information on the state and size of the industry, significant issues and challenges, and subsectors such as knowledge management and business rescue. There are profiles of 53 companies including major players such as Accenture, BDO, McKinsey, KPMG, Deloitte and PwC and institutions such as Business Partners and the Free State Development Corporation.

Strengths

Effective knowledge management promotes innovation and enhances productivity, profitability and sustainability.

Government has prioritised the development of the knowledge economy. Leading global consulting firms operate alongside micro-consultancies. Management and business consulting in South Africa is a mature, well-established industry that serves all sectors of the economy. The industry is competitive and barriers to entry are low.

Threats

Corruption is an ever-present challenge.

Cybersecurity breaches pose a threat to information and knowledge security at both consulting firms and their clients. Low economic growth threatens to limit expansion in the sector. The brain drain of skilled consultants could reduce the available skills. The industry is highly exposed to domestic political and economic instability. The rising competitiveness of the market, with client-companies increasingly relying on internal resources, or shifting away from traditional consulting firms to alternative independent consulting models.

Weaknesses

Dogged by corruption scandals, the industry has suffered significant reputational damage and public confidence in the bona fides of consultants has declined. Highly skilled consultants with the requisite experience are in short supply and the cost of retaining staff is high. The industry is highly fragmented. The South African consulting industry is self-regulated. The uptake of knowledge management solutions is constrained by the country’s relatively limited appetite for knowledge sharing.