Automotive sector up 11 per cent – manufacturing as a whole also showing strong demand...

A new Source (Sourceforconsulting.com) EMEI report[1] has found the consulting market across 11 major markets in Europe, the Middle East and India was worth €26.4 billion in 2011, up just under 4 per cent on the previous year. Levels of growth in emerging markets significantly outperformed those in most mature western consulting markets.

While the levels of growth were highest in the Gulf Cooperation Council (GCC) and Russia (both at around 20 per cent), it was the German market, already the second biggest in the region (behind the UK) which had the most positive impact on the market, growing by just over 7 per cent.

The UK consulting market (still the largest market across the EMEI) after a strong start, slowed to remain static over the year. Partly reflecting countries most affected by the euro crisis, the consulting industries of Italy and Spain contracted by 10 per cent and 3 per cent respectively.

Meanwhile growth in the Indian consulting market, which was previously a star performer, slowed significantly, growing just 4.5 per cent between 2010 and 2011.

Manufacturing demand – with the automotive sector up 11 per cent

Across the EMEI region, the manufacturing sector recorded the highest levels of growth - up 8 per cent to €5.9 billion, with spending on consultants in the automotive sector up by 11 per cent. 

Demand for consulting across the financial services sector softened over the past twelve months. On average, growth rates grew by 2 per cent in this sector, taking the market to €7.3 billion and banking and capital markets grew by 1.5 per cent, to €4.8 billion). The overall public sector consulting market (€3.2 billion) shrank by 3 per cent overall; but weak demand in western Europe was offset by strong growth in emerging markets.

Fiona Czerniawska, co-founder of Source said:

“Our report finds that there is a two speed consulting market across the EMEI. One, which is mature and presently experiencing single digit levels of growth, and the much more dynamic emerging markets, which continue to show strong demand for consulting expertise.”

“Going forward, growth will be greatest and fastest where firms are prepared to change their business models, rather than add new services. This may take several forms: for some firms, the opportunity will lie in finding different ways to bring innovative ideas to market, or by becoming the ‘white label’ supplier of services to firms with bigger brands. For others, the challenge will be to re-engineer the pyramid model, enabling firms to be more flexible in the way they deliver services to clients.”

The service lines…

The report also found that IT consulting accounted for just over a quarter of all consulting (€6.8 billion) last year. Growth was higher in the next biggest market: formulating strategy (incl. M&A), which was worth €5.5 billion, up 5 per cent on 2010. Operational improvement was worth €5.3 billion up 4 per cent on 2010. The report says that this is reflecting clients’ continued stress on productivity improvements and cost-cutting. However, the highest growth of all was in helping clients with their own growth agenda. Although this is still a small market, demand leapt by almost 50 per cent to €960 million.

Commenting on the demand from emerging markets, Nick Stagg at the Management Consulting Group said: “Four years ago, less than four per cent of our work was carried out in emerging markets; it’s 18 per cent today. The priority for us is to stay very flexible: we just started a project in Europe which ended up in Peru, so it’s essential that we can move the right people to the right place at the right cost.”

To order a copy of the report, please contact julie.ahadi@sourceforconsulting.com

or telephone +44 (0)20 3178 6445.

About this report

Source’s Management Consulting Market Report for Europe, the Middle East and India focuses principally on consulting done by mid- and large-sized consulting firms (those with more than 50 consultants) and typically includes work they have carried out for mid- and large-sized clients in the major consulting markets in Europe, the Middle East and India. It therefore reflects the "addressable" market for most mid-and large-sized consulting firms. It is not, however, the entire market. In particular where Source refers to the Middle East it has focused principally on the Gulf Cooperation Council (GCC).

It is based on four main sources of data. Source carried out in-depth telephone or face-to-face interviews with more than 260 people in 155 consulting firms in 26 countries between February and May 2012, giving it a rich and detailed qualitative picture. Many firms also made available data about their business and its split by country, sector and service, to which Source added desk research on the market. Taken together, this has allowed Source to develop a detailed, bottom up model of the consulting industry across Europe, the Middle East and India, based on around 400 consulting firms, and it is this model which is the source of all the market sizing data in the report. The fourth source of data is the Source Client Research Programme, based on interviews with end-users across four major business functions (IT, HR, finance and strategy and operations) in multinational organisations (private sector only), which illustrates how multinational companies’ use of consultants is likely to change in the short-term and which types of consulting services and which types of firm will see the strongest demand. More than 400 major buyers of consulting services across Europe and the GCC were interviewed as part of this research programme between October 2011 and February 2012.

For the sake of clarity, management consulting includes a broad range of business advisory services but excludes tax, audit, the implementation of IT systems and the delivery of outsourced/offshored services. Where mergers and acquisition work is concerned, consulting on deals is included (under strategy consulting) but corporate finance fees on deals themselves are generally not included although it is not always straightforward to separate the two.

Source has restated data from 2010 which was used in last year’s report to take into account changes to the way some consulting firms see their services, mergers and acquisitions and new firms that meet its criteria, so that it can make like-for-like comparisons between the years.

To order a copy of the report, please contact julie.ahadi@sourceforconsulting.com or telephone +44 (0)20 3178 6445.