Consulting in Spain: a recipe for survival?

The Spanish consulting market is a long way from the current engines of growth in Europe, the German and Swedish markets. Its immediate past may be troubled, but it can still teach us important lessons about future success.

We estimate the Spanish market for “big” consulting (work done by consulting firms with more than 50 consultants for clients whose turnover is in excess of €500 million, the focus of our European Market Report) was worth around €1.1 billion in 2010. The debt crisis made this one of the toughest consulting markets of all last year; smaller budgets have inevitably resulted in greater competition and steeply falling prices. The financial services sector remains the biggest market for consultants (it accounts for around 23% of the total); manufacturing is slightly smaller (18%), but telecoms is relatively large (12%). The public sector, excluding healthcare, represents around 13% of the market. Much management consulting in Spain is really IT consulting: we estimate it accounts for 45% of the market. That squeezes demand for other services, with only 13% going on operational improvement, 10% on managing people and 9% on strategy.

But there are still success stories: with Spanish clients keen to tap into faster-growing consumer markets, most obviously in South America, there’s money to invest with consultants who can offer insights into those emerging markets and guidance on how best to expand there. Two distinct categories of consulting firms are starting to emerge as a result. The first are those which have, and are able to exploit, experience of South American markets. Their combination of mature consulting skills (from Spain) with knowledge of emerging markets is a comparative scarce resource: established Spanish firms will have the former, but perhaps not the latter; new firms in South America clearly boast the latter, but perhaps not the former. Demand for firms that can do both will be high. By contrast, the second group of firms are those unable to compete in this increasingly global market and which find themselves relegated to slow growth at best.

The other implication of this shift is even more fundamental. Over time the faster-growing, more international firms will outpace their local rivals. Instead of being a “normal” consulting market, Spain will, in effect, become a centre of excellence for advice on how best to exploit the opportunities in South America. We’re accustomed to the idea of consulting firms becoming more specialised, but perhaps countries will become so as well.