Governments’ use of consultants continues to grow
According to Kennedy Information’s “Public Sector Consulting Marketplace 2007-2010” report, opportunities for providing consulting services to the public sector will expand in the years ahead. The report estimates that demand from federal, state and local governments in the United States as well as from international public entities will expand at a compound annual growth rate of 5 percent through 2010.
By 2010, the size of the public-sector market for consulting services will exceed $60 billion annually—up from around $50 billion in 2006. The estimate, however, does not include consulting done as part of government health care programs.
Defense, war on terrorism budgets driving consulting demand
Increases in spending for the war on terrorism and defense, as well as growing budgets for homeland security, have been driving public-sector consulting revenues, said Kelly Matthews, senior analyst at Peterborough, N.H.-based Kennedy Information. In the future, governments will turn to consultants as they work to enhance productivity, reduce costs, deal with budget constraints and wrestle with policy and compliance issues, Matthews said.
Some of the major practice categories in the public-sector consulting market are IT consulting, HR consulting, operations management and business advisory services. The latter category, Matthews noted, “comprises the smallest service line, but is the fastest-growing segment of the public-sector consulting market.”
IT consulting “is the largest segment of the public-sector consulting market, because most engagements require technical solutions, in addition to other types of consulting, to achieve the efficiencies needed to address the size and scope of most government projects,” Matthews said.
Demographic trends will encourage more governments to rely on consultants in the years ahead.
“The public sector will be hit especially hard by talent shortages as baby boomers retire; this is expected to create demand for consulting related to recruiting, developing and retaining next-generation employees in a number of country-markets with aging government work forces,” Matthews explained.
For more information on the report, click here.