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Environmental Consulting as a Revenue Line for Professional Services Firms
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This is a very big industry that is becoming more main stream. The industry consolidation bandwagon is starting, so like the Gartner Hype Cycle predicts, its only a matter of time before there is wholesale buy-ups of niche Environmental Consulting firms by the broader based players. The USA market is the worlds largest, with spend on Environmental Consulting already at $11.7 Billion. However its also a mature market and not predicted to really grow over the remainder of this decade. If you expand the above to the build side of Environmental facilities, the number rises to over $19 Billion. However, the global growth expectations across all areas of consulting are predicted to stay fairly flat over the next 5 years, so the prediction is not surprising. Based on Hoovers data, the aggregated revenues of the world’s top 20 firms breaks down like this:
- Water and waste management services = 30%
- Contaminated land services = 29%
- Environmental management, compliance, and due diligence = 14%
- Environmental impact assessment and sustainable development= 14%
- Climate change and energy = 8%
The world’s largest firms that account for about 30% of global spend are
- Veolia Environmental Services (US)
- Tetra Tech (US)
- AECOM (US)
- Bechtel (US)
- CH2M HILL (US)
- AMEC Earth & Environmental
- Golder Associates (both based in Canada)
- Environmental Resources Management (UK)
- Arcadis (Netherlands).
Worth noting that even the largest has less than 5% market share under any segmentation that I could see. However, and just to make a point, a great deal of the companies in this area are actually very small. The overall category comes under Engineering Services, which has a Global Revenue of $783 Billion, employs over 4 Million People across over 730,000 companies (an average of just 5 people per firm).
Where the Customers Come From
Businesses and government agencies have to comply with environmental laws and regulations. The profitability of any company depends on securing contracts with large organizations such as the government. While Large firms have the advantage of providing a wide range of environmental expertise, small firms are able to compete by specializing in local markets or focused areas of expertise.
Conclusion
If it makes sense to enter the market, it is probably best achieved by buying an existing small firm. The number in the UK alone looks in excess of 1000 firms, with small employment in 90% of them And equally, the day rates do not look that great either when if comes to what the IT industry achieves, with lower than average utilization rates. So my deduction is that much of the Environmental Services Consulting Industry could do with a “Best Practice” bath from the broader industry its a subset of.
But fundamentally, Environmental Consulting is a Professional Services Industry, so its challenges are familiar to us all.
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About Alan Crean
As a PSA&PPM Principal at the Changepoint, Alan enjoys working with and advising a variety of interesting Managers and Executives about the best practices that help us all achieve our business goals. Alan Crean is a Subject Matter Expert in Professional Services Automation with a particular focus on supporting the Lead to Cash process for Technology based Professional Services and Consulting firms. You can connect with him on LinkedIn here.Top 10 Recommended Documents on Growth Strategy
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