Growth in consulting work is slowing as high inflation causes clients to cut costs at the same time the PwC tax leak scandal fuels a reputation crisis in the industry and the federal government tightens up on public sector work.
The Australian consulting market is forecast to grow by 8 per cent this year, down from 10 per cent in 2022, as high inflation, ongoing trade tensions and a public sector pullback hit spending, new research shows.
The market grew by about 10 per cent to US$5.75 billion ($8.7 billion) in 2022, down from 10.5 per cent in the previous year, British-based research firm Source Global Research found.
Christa Gordon, KPMG national managing partner of management consulting.
Public sector consulting growth slowed to 7.6 per cent in 2022, compared to 8.7 per cent the year prior, and will contract further to 7 per cent this year, Source estimates.
The federal government will likely have a smaller consulting bill this calendar year after the Department of Finance cut PwC off from future contracts in May due to the firm’s failure to come clean on the extent of its tax leaks scandal.
The loss of federal work forced the firm to sell its public sector consulting division to private equity investor Allegro Funds for $1 last week.
KPMG’s Christa Gordon said her firm had seen a reduction in demand for services in the public sector since the May 2022 federal election.
“We have seen a reduction in demand for services, where the public sector has more in-house capabilities, [for example] policy advice and program management,” she told Source.
“One emerging trend is the increasing expectation that consulting work will contribute to the rebuilding of public sector capabilities through some capability transfer
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