The Consulting Market of Oceania is Embracing the Digital Wave- Top 8 Features
“Australia is just so full of surprises.” – Bill Bryson
Australia is unique not only for the amazing nature, and species like koalas and kangaroos, but the remarkable Consulting market growth of 6-7% for the past few years.
Let’s take a couple of minutes to discuss the Economies of the region and how the current Consulting market is shaping up.
Oceania in a Snapshot – Top 8 Features –
1. Stable growth as the economy transforms
Oceania economic region consists of 14 countries. However, Australia and New Zealand account for 97% of the associated GDP. The region is growing approximately 3% on average and is one of the fastest growth rates among the mature economies. New Zealand – Economic Perspective
New Zealand continues to rely heavily on tourism, agriculture, and manufacturing with exports representing 30% of GDP and a vivid set of SME’s. Steady and Above average Population growth –
The region’s economic growth is also influenced by the population growth, and by the significant government investments, notably in Australia and New Zealand.
Consulting projects are all about initiative and being proactive. Starting with your winning RFP process that has attracted a score of proposals, the assessment phase now begins.
2. Australia’s key economic sectors include Mining, Financial Services, Agriculture, and Manufacturing
Important to mention that the aging population will cause an increase in Health Care and Social Services sectors.
Manufacturing is facing serious headwinds, as with many other developed and high-wage economies.
With natural resources having peaked, other sectors will need to expand as well to sustain growth. The Australian Government has undertaken a set of measures to increase the competitiveness of Australian businesses, to lower costs and to spur innovation. In this context, Digital transformation is expected to contribute $50 billion to the economy.
3. The consulting market is embracing the digital wave
The management consulting market in Oceania is primarily concentrated in Australia. It is steadily growing at 6% to 7%, an impressive performance for a mature market in a mature economy.
4. Key sectors for consulting are aligned with the Australian economy
Natural resources, energy, financial services, and the public sector are leading the way.
The Australian economy has gone 27 years without a recession, and while there are risks on the horizon, economic growth should remain solid in 2019, with business investment likely offsetting the slack created by a devastating drought, a contracting housing sector, and subdued consumer spending, was revealed in a recently published Deloitte Insights study.
Australia’s economy stays on track, and strong global growth in the region is adding to the Australian national income, while a combination of rising commodity exports and government spending is ensuring that economic growth continues at around trend pace.
5. Chinese Stimulus keeps Commodity prices higher than average
Australia’s mineral sector enjoys growth due to the Chinese stimulus, an effect of the ongoing trade conflict with the U.S.A is keeping key commodity prices, particularly iron ore and coal, higher than they would otherwise be.
However, the current strength in commodity prices is a response to an economic issue and is not expected to last long.
8 Strong leading business investment indicator-
They suggest that steady growth in profits, increased capacity utilization, low borrowing costs for big business and the need to spend money to maintain Australia’s positive mining capital stock, all point to growth in investment over 2019 and 2020, as per Deloitte Insights.
6. Economic risks on the horizon
The housing market is more vulnerable today, and there is a downturn in the house prices. Large house price falls, together with the significant fall in equity prices, may reduce households’ willingness to spend as their wealth declines. Also, Consumer spending will likely weaken as a result. Consumers will be relying on wage growth to boost spending, substituting the reduction in wealth. Wages have been improving but slowly.
Health and education sectors are demonstrating strong growth. The consumer goods industry is a clear example of disruption driving demand for consulting services. The financial sector is coping with the challenges of Fintech, the adjustment to new regulations, and the shift in customer perceptions. Natural resources and energy companies are currently looking for efficiency and cost savings.
The public sector represents a large chunk of the expenses. State and federal governments leverage digital for greater efficiency and implementing significant reforms. However, political pressure mounts to reduce consulting costs. States like NSW are launching specific programs to tackle consulting costs. They are implementing standardized definitions, capped rates, capped expense, and discount structure. But those programs will continue to face significant headwinds if sourcing revolves only around the incumbents and major consultancies.
7. Digital transformation’s effect on the region’s economy; its Stimulating effect on the Consulting Market
From a capability standpoint, the influence of digital capabilities cannot be overstated in driving a significant share of the projects initiated in the Australian market.
Projects encompass analytics, artificial intelligence, digitization of activities, and customer experience. The digital wave is also forcing companies to review their strategies, generating higher demand for the strategy consulting firms. As in most Anglo-Saxon markets, human resources related consulting is also well developed and growing.
8. Australia has embraced the Digital transformation
and sectors such as Banking, Trading, Retail, Education, Learning, Media, Communication, and Entertainment, have seen a significant technological boost.
The Australian government has launched a Digital Economy Strategy. And Australia’s Tech Future describes how the country can maximize the opportunities of technological change by focusing on key areas like developing workforce’s digital skills, deliver state digital services, building infrastructure and providing secure access to high-quality data, maintaining cybersecurity, and more.
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