BrazilGlobal energy & resources consulting industry grows to $15.5 billion
The global energy & resources consulting industry grew by 5.9% last year to reach a value of $15.53 billion. The spurt represents the fastest expansion of the market in four years, as the sector continues on a healthy trajectory thanks to increasing demand regarding digital transformation and renewable technology adoption.
The nearly 6% growth comes on the back of three slower years, with on-going low commodity prices and resulting financial pressures meaning growth in consulting spending by clients in energy & utilities space in 2016 and 2016 was 3.5% and 3.2% respectively. Lower commodity prices have also had an impact.
In particular oil has remained far below what most would consider “normal”, despite picking up from a crash in its value. Having steadily risen in price through the past 12 months, oil’s stock has once again plummeted at the end of 2018, something which hit pause on a number of large projects in the last two years, and will likely do so again now.
Despite this, across the consulting landscape, energy & resources now accounts for around 12% of entre industry, a share which is relatively equal to that in 2014. This is largely because clients are keen to source external expertise when it comes to navigating these new challenges.
According to data from Source Global Research, the massive US energy & resources consultancy market is largest of world, weighing in at a value of $7.85 billion. This is followed by Australia’s energy and resources market, which grew by 4.7% to over $1 billion in 2017. Hot on heels of Australia is the DACH region, consisting of Germany, Austria and Switzerland. DACH energy consulting grew faster, at a rate of 5.9% in 2017, closing the gap on Australia to sit only $18 million behind in third place.
The growth of the DACH market has undoubtedly been buoyed by the German Government’s change of tack regarding its energy policy. In the wake of Japan’s Fukushima crisis, which saw an earthquake cause a nuclear power-plant to contaminate coastal waters, Germany announced plans to close the European nation’s own nuclear plants, boosting demand for consultants to help energy firms reposition themselves for a post-nuclear industry.
Main services
From a functional perspective, technology is the biggest service line in the global energy and resources consulting market by some distance. While the researchers have not unveiled data for 2017, the two years previous saw its share account for 33% of all consulting spend, and little is likely to have changed there.
As with every other industry, digital transformation has driven this demand for technology consulting work. Looking forward, this is set to continue and even pick up pace, as it enables clients to improve productivity and cut costs, while becoming a driver of change in its own right. This is particularly clear in the case of big data and digitisation, which are transforming the operations of clients keen to finally analyse the vast amounts of data they previously collected, but were unable to effectively use before.
Meanwhile, operational improvement is still the second largest service line valued at nearly a quarter of the energy & resources consultancy market. This includes services such as process excellence, Business Process Re-engineering (BPR); customer/supplier relations management (CRM); turnaround/cost reduction, purchasing, supply chain management and outsourcing among other areas. Financial management consulting is estimated to account for just over 15% of the global energy consulting market, with finance and risk propositions including the revisiting of financial planning and budgeting, performance management, enterprise risks, compliance, and finance transformation.
Another major service area is strategy, where consultants aid clients with analysing and redefining their strategies, improving their business operations and optimising their corporate and business planning, business modelling, market analysis and strategy development. At the same time, consulting on human capital (also known as People & Change) remains an important component of the sector. Spanning Human Resources (HR) consulting, it includes change management, retirement schemes and talent development programmes, among other offerings, making it increasingly relevant as many of the world’s leading economies face ageing populations.
Looking ahead, the digital boom is set to remain the key driver of growth in energy and resources consulting. Transformation and restructuring in energy has become indispensible to clients looking to weather volatile pricing scenarios in the oil sector, and pressures resulting from the push for renewable technologies. Clients will continue to seek out efficiencies and restructuring opportunities across the whole value chain, for the foreseeable future.
Improving customer interaction in utilities is also an important factor which will boost growth for consultants. As is the case in many a crowded market, utilities clients are continuing to invest in customer service offerings, to help set their services apart from rivals. This will continue to generate good revenue growth for consultants in the space, alongside the need for renewable integration, and moving from current electricity systems to new ones.
