A new Sourceforconsulting.com report released today (23^rd June 2011) has found that the total EMEIA market[1] for consulting hit almost €25billion in 2010. The report, which interviewed more than 150 consulting firms across 35 countries, also found that the total market is expected to grow by almost 5 per cent in 2011-12. The report estimates that the fastest growing country in Europe will be Germany over the next 12 months.

 

The financial services sector is the biggest spending sector across the region, accounting for €7billion in 2010, or 28 per cent of all consulting work. Banking alone represented 19 per cent at €4.75billion.

 

The manufacturing sector also demonstrated its recent rebound to recovery through its considerable investment in consultants. In 2010, the sector spent €5.3billion on consultants to help them drive efficiencies, expand and innovate. Germany’s big and mid-sized manufacturing companies spent €1.5billion on consultants (29 per cent of its total spend on consulting), the UK spent €831million and France €752million.

 

In terms of services, the biggest market overall was IT consulting, which amounted to €6.6billion in 2010, or 27 per cent of the total. Consulting aimed at helping organisations improve operational performance was next, generating €4.9billion.

 

Interviewed for the Sourceforconsulting.com report, Antonella Mei-Pochtler, Senior Partner and Managing Director at The Boston Consulting Group says: “It’s a critical time for the consulting industry. To succeed you have to develop new ideas and attract the best people, even if that means being less profitable for the short-term. You need the capability, strength and governance structure to invest now for the future.”

 

Dr Bernd Gaiser at Horváth & Partners, Germany, operating in the second largest market for consulting in Europe, said:“The German economy is the driving force in Europe at the moment. Demand for consulting is recovering much faster than everyone expected.”

While the UK public sector for consulting has seen a sudden and dramatic decrease in consulting spend over the last twelve months, the other four main spenders on public sector consulting in Europe – Germany, France, Benelux and Scandinavia are anecdotally reporting that this market has remained stable, or in France’s case, grown.

 

Lyonel Roüast, EMEA President at Compass Management Consulting, France, agrees: “We’re now unquestionably in a post-crisis environment. Clients are re-launching projects they stopped two years ago and are starting to invest more – all of which makes us much more confident about the future.”

The report says that although IT consulting is the biggest market overall, and it mainly centres on getting more for less, there has been a lot of interest in cloud computing with many consulting firms reporting the first real investment from clients in this area.

 

David Thomlinson, Senior Managing Director – Geographic Strategy & Operations, from Accenture comments: “Although we expect our core technology consulting practice to grow in the UK, there’s also a lot of interest in newer offerings around cloud, sustainability and analytics.”

 

The Sourceforconsulting.com report also identifies six key client trends:

1. Context – global versus local – Consultants expect the globalisation of clients will be a crucial source of growth, but at the same time, it will reshape the industry.

2. Purchase – procurement versus relationships – The increasing use of multinational purchasing models will impact the historic influence of relationships.

3. Resources – internal versus external expertise – There is evidence that clients are choosing to staff more projects internally which, before the crisis, they might have hired external consultants to do.

4. Delivery – experts versus bodies – Instead of competition primarily being between familiar enemies – the specialist against the generalists – it’s now between firms and freelancers.

5. Outcome – advice versus implementation – The majority of firms now sit in the middle between advice and implementation. A new basis of differentiation is needed: outcomes.

6. Margin – price versus value – The report estimates that fee rates among multinational companies have dropped by 10-15 per cent. The economic recovery is still too new to be able to predict whether fee rates will return to their pre-recession levels, but past experience (the 2002-03 downturn) suggests that they won’t.

 

For further information on the Sourceforconsulting.com Consulting Market Report 2011, visit www.sourceforconsulting.com or contact Julie Cleasby on +44 (0)20 3178 6445.

David Pippett, DWP Public Relations

Tel: 07899 798197

Email:  david@dwppublicrelations.co.uk

 

Edward Haigh, Head of Content and Marketing, Sourceforconsulting.com

Tel: 0845 293 0993

Email: edward.haigh@sourceforconsulting.com

More than 250 people in more than 150 consulting firms across 35 different countries were interviewed for this report between February and April 2011. In addition to providing immensely valuable insights into the trends in consulting as they saw them, many of these people were able to provide Sourceforconsulting.com with data about their business and its split by country, sector and service. This data, combined with Source’s own estimates for a further 150 consulting firms with more than 50 consultants, has allowed it to develop a detailed, bottom-up model of the consulting industry across Europe, Middle East, India and Africa and it is this model which is the source of all the market sizing data in the report. Sourceforconsulting.com has also incorporated data from its Quarterly Buying Trends in Management Consulting report to illustrate 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. Slightly fewer than 50 major buyers of consulting services contributed to this survey between January and March 2011.

 

This report focuses principally on consulting done by mid- and large-sized consulting firms (those with more than 50 consultants) for mid- and large-sized clients (those with an annual turnover in excess of €250 million) in the major consulting markets in Europe, the Middle East, India and Africa. It therefore reflects the “addressable” market for most mid-and large-sized consulting firms as most would not seek, nor be able, to compete with very small firms and/or freelance consultants. It is not, however, the entire market. Source’s definition of management consulting includes high-level IT consulting, but not package implementation and systems development; it also includes advice on outsourcing projects, but not the provision of the outsourced service itself. Also excluded from this report is all the income earned by mid- and large-sized consulting firms from other sources, whether from audit fees, IT implementation, outsourcing, actuarial and investment risk management, civil engineering and a range of other professional services.

Sourceforconsulting.com is a leading provider of information about the market for management consulting. Set up in 2007 and based in London, Source serves both consulting firms and their clients with expert analysis, research and reporting. We draw not only on our extensive in-house experience, but also on the breadth of our relationships with both suppliers and buyers. All of our work is underpinned by our core values of intelligence, integrity, efficiency and transparency.

 

Sourceforconsulting.com is owned by Source Information Services Ltd, an independent company, which was founded by Fiona Czerniawska and Joy Burnford. Fiona is one of the world's leading experts on the consulting industry. She has written numerous books on the industry including: The Intelligent Client and The Economist books, Business Consulting: A Guide to How it Works and How to Make it Work and Buying Professional Services. Joy Burnford was Marketing and Operations Director at the UK Management Consultancies Association between 2003 and 2010, and prior to that worked for PA Consulting Group and has extensive experience of marketing consulting services.

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