Australia – the land of milk and honey for the Big Four?
Thursday 29th Sep, 2016
By Edward Haigh.
It’s not entirely unusual to see the Big Four outperforming the market these days. In 2015 they did so in all of the five biggest consulting markets in the world, but nowhere has the difference between their performance and that of other firms been quite as stark as it has been in Australia. So why?
In part it’s because the Big Four are placing themselves in the sweet spot at the moment–sitting somewhere between strategy and technology and asserting their ability to do both of those and a whole lot else besides. In a market in which clients are often trying to do everything, the Big Four offer everything.
Another part of the story is about the Big Four’s ambitious plans for growth, which has seen them become extremely active acquirers over the last few years, and often led them to compete aggressively (some would say too aggressively, even for their own long-term good) on price.
But I think their success is also part of a broader story in Australia, which is seeing the economy transition–painfully slowly at times–from being resources-based, to be services-based. Indeed, if anyone’s looking for signs that the transition really is happening–and there are doubters–then perhaps the consulting industry can provide one: 2015 was the year in which the financial services sector overtook energy & resources to become the Australian consulting market’s biggest customer. And it’s also a sector which has long shown a strong preference for the Big Four.
Part of that story, in turn, is about regulation. While Australian banks have owed much of their success in recent years to their relative isolation, they’ve been increasingly active internationally, and that means being willing to comply with international, as well as domestic, regulation. And of course regulation is an area in which the Big Four have traditionally dominated.
The big question now concerns whether the Big Four can hold their position as Australia’s banks pursue a digital transformation agenda, and the sweet spot between strategy and technology becomes much more precise, to the point where it’s not about sitting somewhere between those two, it’s about bringing them together. That’s a much more open playing field, in which technology firms (like Accenture and IBM) and strategy firms (like McKinsey and The Boston Consulting Group) are arguably just as well placed.
So, Australia may, indeed, be the land of milk and honey for the Big Four at the moment, but there are plenty of other people queuing up to get in on the action.
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