Consulting market of South America grows 4% to $2.6 billion

01 August 2018

The management consulting industry of South America grew by 4% last year, to a total value of nearly $2.6 billion. Brazil remains the region’s largest consulting market, estimated to be worth around $1.2 billion.

South America’s consulting market is described as “complicated” by many consultants in the region, according to a report released by Source Global Research. The researchers interviewed 21 leaders operating in the region from consultancies such as Bain & Company, EY, Deloitte, KPMG, OC&C Strategy Consultants, Protiviti, PwCRoland Berger and ZS Associates. The senior consultants highlighted that language and cultural differences, combined with a mix of traditional big spenders but also many smaller (emerging) local companies, make the South American consulting market a diverse and fragmented landscape.

“Each country has its own story with its own problems. It changes dramatically from country to country,” explained Fernando Fleider of ICTS, a São Paulo-based consultancy that is affiliated with Protiviti. Nevertheless, the researchers found that despite such differences and a backdrop of political and economic instability, across the board, the consulting markets of the region’s twelve countries (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela) have grown modestly, by 3.6%.

Brazil is by far the largest market in South America, valued at nearly $1.2 billion, making up almost half of the total ($2,568 million) by value. However, recent political and economic troubles have seen the market grow slower than the region’s average, and as a result Brazil’s consultancy growth is being eclipsed by that of the much smaller markets of Argentina, Chile and Colombia. Growth in Brazil’s consulting spend did, however, recover in 2017 at a growth rate of near 3%, compared to a flat performance in 2016. Heloisa Montes, a leader at Deloitte in Brazil, said “We are back to growth.”

According to Jean-Claude Ramirez, partner in Bain & Company's São Paulo office, the strategy consulting segment in the country showed good signs of recovery. “2017 was a strong year for us, particularly in Brazil. Brazil was starting to emerge from a very deep recession, and that recovery sparked an uptick in the strategy consulting market.”

The consulting market of South America and Brazil ($ billion)

The positive development comes just two years after Brazil’s management consulting industry grew by just 0.1% (in 2016), and as a result consulting firms were forced to cut costs internally to cope with a widespread reduction in fees. Due to what many describe as the worst economic crisis in the country’s history, the consulting firms which were able to offer operational improvement and cost reduction services were the ones that outperformed the rest. Wladimir Constante, Executive Vice President at Alexander Proudfoot in Brazil, remarked last year: “Clients needed help with efficiency, cost reduction, and operational improvement work and that generated large, profitable contracts for us. As a result, we performed very well.”

Outlook for South America

In its outlook for South America, Source Global Research warns in its report that the upcoming elections across the continent make it increasingly likely that instability will continue to plague the region for some time. However, there are signs of good news. One is that consulting services might be gaining more and more interest from smaller clients, a group which previously hardly made use of consultants. Victor Hugo Ferreira Junior, founder of Actavox Management Consulting explained “Five years ago, it was only large companies that wanted consulting services. Now, even very small companies are looking for consultants, which represents a cultural shift.”

Another promising development is the growing uptake of digitization in the region, as clients recognize its potential to improve their businesses. One of the biggest areas of interest in digital take-up is in its potential to cut costs and improve efficiency, with significant interest in data & analytics. In preparation for the boom, South American consulting firms are working hard to ready themselves for expected growth in this market. Globally, the size of the digital transformation market has jumped from $23 billion to $44 billion in the past twelve months. 

The management consulting industry is defined by the researchers as all business advisory services, excluding audit & accounting, the implementation of IT systems, the delivery of outsourced/offshored services, HR compensation/benefits administration and technology, and tax advisory. M&A work performed by consultants (strategy, commercial and operational due diligence, post-merger integration) is included in the sizing; corporate finance fees on deals are excluded.

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The consulting industry show of force for Mexican workplace diversity

20 November 2018

Some of the world’s largest consulting firm’s have joined the Human Rights Campaign Foundation’s five year in-the-making Workplace Equality Program, demonstrating the industry’s determination to promote diversity and inclusion in the workplace.

Diverse and inclusive workplaces benefit both companies and economies as a whole. They promote engagement, attract a greater talent pool and improve decision making as there is a broader range of knowledge across sectors. Whilst the uptake in equality policies – especially for LGBTI+ people – has been slow in comparison to Europe and North America, Latin American businesses are beginning to capitalize on the many benefits that accompany equality.

The Human Rights Campaign Foundation released the results of Equidad MX Best Places to Work LGBT 2018 – with the help of local diversity consulting outfit FVConsulting – outlining a number of companies that represent the top standards of equality. HRC Equidad MX promotes three strategic pillars to improve equality across workplaces. They include; the adoption of nondiscrimination policies, the creation of employee resource groups or diversity and inclusion council, and engagement in public activities to support LGBT inclusion.

“Corporate leaders in Mexico increasingly recognize that when they stand up for LGBT people, including their own employees, customers, and consumers, they promote justice while also serving their bottom line,” said Francisco Robledo and Fernando Velázquez of HRC Equidad MX Implementing Partners.

The consulting industry show of force for Mexican workplace diversity

The consulting industry overall exemplified best practice and joined industry heavyweights such as AT&T, Google and Walmart. At the top of the list, scoring 100% on their assessment is Accenture, EYIBM and The Boston Consulting Group who join 28 other businesses. Together, the group accounts for over half a million workers throughout the country. They were also joined by out-performers McKinsey & Company and Oliver Wyman who were also celebrated for their achievements.

“We are proud to witness the growth of LGBT-inclusive businesses throughout Mexico. This year’s honorees keenly understand that the economy of the future is built with the diverse talent of today, and that LGBT inclusion is key to attracting and retaining the best workforce,” said Deena Fidas, HRC Director of HRC Equidad MX and HRC Foundation’s Workplace Equality Program.

“Mexican multinational companies have enormous economies and employ thousands of people. This gives them the ability to influence change on this issue in a unique way, and we are delighted to recognize them for this commitment.”

Inclusion and diversity

The report states that the reasons for driving change and move into line with the global standards of inclusion and diversity can aid international growth. Anti-discrimination policies can allow businesses to align with key investors and supplier standards, eliminating barriers to trade and mobility of talent.

For example, as over 80% of Fortune 500 companies prohibit discrimination based on sexual orientation and gender identity, a lack of policy itself may be a barrier to trade in general. For Mexico in particular, the country itself has been plagued by a high level of gender inequality driven by machismo.

Described in an A.T. Kearney report last year as one of the main factors in a lack of workplace diversity in Mexico. Machismo is a large barrier to the economic benefits which diversity will bring to the Mexican economy. The report identified that the prevalence of a ‘macho' culture itself is hindering Mexican workplace growth and productivity.

That being said, the growth in partners and participants for Equidad MX shows that times are changing. “HRC Equidad MX 2019 is an unprecedented moment for LGBT inclusion in Mexico and the Latin American region,” Robledo and Velázquez concluded.