McKinsey and BCG Reap Record Government Revenues In Australia

From major corporations such as PricewaterhouseCoopers to smaller, more specialized boutique consultancies, the past two years have seen unprecedented revenue growth as public and private sectors drove a record demand for services. For the second consecutive period, two of the world’s top strategy and management consultancies, Boston Consulting Group (BCG) and McKinsey & Company (McKinsey), have doubled their income from Australian federal government contracts, according to an analysis by InnovationAus.

A review of available records showed that McKinsey grew its FY2021 revenues by 75%, and BCG’s growth spiked 120% from the financial year ending in 2020, a significant gain relative to the double-digit revenue shortfalls incurred during the initial public health shutdowns.

Assessing the gains of privately-owned consultancies is generally difficult due to the lack of publicly reported data, and InnovationAus faced additional difficulties because of government obfuscation and outright refusal to disclose information surrounding contract sourcing. The AusTender system is supposed to be a source of public transparency on contract engagements, but all too frequently provides little or no information of substance. In one case, the Australian government awarded McKinsey a $2.2 million contract via the Department of Education, Skills and Employment and has simply refused to share details of what, why, and how the contract was awarded - with AusTender merely stating the work was related to a research program, and an “inter-departmental workforce taskforce.”

In other parts of the world, particularly the U.K., there has been growing pushback against a perceived over-reliance on private consultancies by government bodies, leading to efforts to make better use of in-house expertise, upskill civil servants, and utilize external consultants more efficiently. Additionally, best practices have been established on the hiring and use of consultants, with hundreds of government employees receiving training in recent months. Back in Australia, the opacity surrounding the contract tender process is receiving greater public scrutiny, with the opposition Labor party – which recently voted down a bill designed to enforce greater transparency – promising reforms if it wins the coming election.

Despite the controversy surrounding secrecy and an eye-watering daily spend, most consultancies are anticipating growth in 2022 as the world economy continues its recovery and additional priorities, such as infrastructure development and ESG initiatives, receive greater public attention.