Report says that European consulting market is set to grow in 2011-2012

Findings in a report published by Sourceforconsulting.com stated that the total European market for consulting reached almost €25billion in 2010. In a survey of more than 150 consulting firms operating across 35 countries it was found that the total market is expected to grow by nearly 5% during the period 2011-2012, with the fastest growing country in Europe being Germany.

Financial services spent €7billion on consulting in 2010, representing 28% of all consulting work and making them the biggest spending sector across Europe, with the banking sector accounting for €4.75billion (19%).

The manufacturing sector spent €5.3billion in 2010 on consultants to help them drive efficiencies, expand and innovate. Germany’s big and mid-sized manufacturing companies spent €1.5billion on consultants (29% of its total spend on consulting), whilst the UK spent €831million and France €752million.

The biggest market overall was IT consulting, accounting for 27% of the total, €6.6billion in 2010.  Consulting aimed at helping organisations improve operational performance generated €4.9billion.

Unlike the UK, where public sector consulting spend has fallen significantly over the last twelve months, European countries seem more stable. 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, as in the case of France, has grown.

Cloud computing

The report says that in contrast to the usual ‘getting more for less’ focus of IT consulting, there has been a lot of real investment in this area triggered by an interest in cloud computing.

The report identified the following key client trends:

Context

Consultants expect the globalisation of clients will be a crucial source of growth, but at the same time, it will reshape the industry.

Purchase

The increasing use of multinational purchasing models will impact the historic influence of relationships.

Resources

Evidence suggests that clients are opting to staff more projects internally which previously they might have hired external consultants to do.

Delivery

Competition is now primarily to be found between firms and freelancers, instead of specialists against generalists.

Outcome

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

Margin

The report estimates that fee rates among multinational companies have dropped by 10-15%. 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.

The 150 page report included:

  • The macro-economic context for the EMEIA consulting market.
  • The overall performance of the consulting industry in 2010 and prospects for 2011-2013.
  • How client behaviour has changed as a result of the recession and now the recovery.
  • Key supply side trends in the major consulting markets in this region: Germany, UK, France, Benelux, Scandinavia, Spain, Italy, Switzerland/Austria, Eastern Europe and Russia, the Middle East and India.
  • In-depth analysis of the evolution, by sector and major market, of consulting on: strategy; M&A; operational excellence; IT; people and change; risk management; project management; marketing and selling; outsourcing.
  • A detailed exploration of the challenges facing different segments of the consulting industry, from strategy firms and IT consultancies to highly-specialised niche firms.

To download an order form for the report, click here.

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