The world's telecom consulting market is finally bouncing back!
Isabelle Paradis
September 2006

Worth US$89.7 billion at the end of 2005, world consulting services are now well on their way to a full recovery, expanding by 7.9%. 2006 and 2007 should continue to bring further growth, with a forecasted increase in revenue of 8.5% and 8.3% respectively. Business and IT consultants started to see a return to growth in late 2003 and early 2004. 2005 saw this trend intensify as the world's business consulting revenue grew by 8.5% to reach US$39.4 billion in 2005.

Telecom consulting generated 10.7% of the world's total consulting revenue in 2005, an improvement compared with 10.5% in 2002 and 2003. As the telecom sector continues to recover from the difficult times of 2001-2002, telecom consulting should continue to increase its share of the global consulting market. It is forecasted that the sector will represent 11.5% of the world's total consulting revenue by the end of 2010.

Telecom consulting is now emerging from 3 years of retrenchment and restructuring. Macroeconomic forces and the bursting of the telecom bubble destabilized the industry and depressed the demand for consulting services. These circumstances resulted in a continued decline in revenue and profits during 2001-2002 which levelled off in 2003.

2005 was marked by an increase in the number of projects and the level of investment, with operators having readjusted their finances after the 3-year recession. The worldwide telecom consulting market was worth an estimated US$9.61 billion in 2005, representing a growth of 10.0% compared with 2004. The market should continue to improve again in 2006, 2007 and 2008.

Even though there are thousands of telecom consultants around the world, over 85.0% of the industry's revenue was generated by the top 30 firms in 2005. After most of the telecom consulting firms downsized their operations in 2003, almost all of them started to hire again in 2004 and continued to do so in 2005. Firms grew their number of employees by an estimated average of 11.9% in 2005. Profitability has also increased almost across the board since 2003, with most firms successfully improving their revenue by employee ratio.

The unchallenged market leader is Accenture, with telecom consulting revenue estimated to have reached US$1,610 million in 2005, representing a market share of 16.8%. IBM follows with revenue of US$1,419 million and a 14.8% market share. Both firms enjoyed growth in 2005, with their telecom consulting revenue increasing by 3.8% and 3.1% respectively.