European Management Consultancy Market 2009/2010

The European management consulting market experienced a significant downturn in 2009, marked by a 5% decrease in revenue. This followed several years of consistent growth across most European nations. The decline is attributed to the global financial crisis and subsequent economic recession, impacting businesses of all sizes. The FEACO (Federation of European Consulting Associations) survey, conducted in collaboration with national associations, confirmed this market contraction. The survey's data, representing over 80% of the European management consulting market, provided a comprehensive overview of the industry's response to the crisis. While 2009 showed a decline, the forecast for 2010 projected a positive, albeit modest, growth rate of 1.6%, signaling an anticipated recovery. The FEACO report’s data collection involved 15 European countries, including nine full members and two associate members. The inclusion of these countries provided a robust dataset, covering a significant portion of the overall market. The report highlighted the dynamic nature of the sector, with continuous emergence, mergers, and reorganizations of consulting firms annually.

In response to the economic challenges, management consulting firms displayed significant adaptability. They focused on cost reduction strategies, improving operational efficiency, and tailoring services to address the specific requirements of their clients. The traditional approach of selling standardized consulting packages decreased in popularity. Instead, flexible firms that could readily adapt to shifting market trends and meet the fluctuating needs of their clientele were in higher demand. Clients increasingly prioritized measurable results and shorter return-on-investment periods. The impact of this economic shift varied among different service lines. While Business Consulting generally maintained strength, other areas like IT Consulting and outsourcing faced decreased demand in certain regions. The report also observed that purchasing decisions for consulting projects were shifting from top management towards procurement departments, particularly during contract negotiations. This increased focus on value for money altered the dynamics of individual contracts, causing a reduction in their average value.

The economic crisis had a varied impact across different European countries. Germany, the largest market, still experienced a decline, although comparatively modest. The United Kingdom held the second-largest share. However, some countries exhibited positive growth. Croatia, for example, demonstrated a 4.5% increase, while others like Bosnia and Herzegovina faced a more substantial decrease (-32.6%). The accuracy of previous forecasts varied considerably by country. Some nations like France, Slovenia, Switzerland, and the United Kingdom provided quite accurate estimations for 2009, whereas others, such as Germany, Greece, Portugal, and Hungary underestimated the recession's impact. The report also detailed variations in turnover per employee, highlighting that a considerable number of countries achieved turnover exceeding €60,000 and €150,000 per employee. These variations emphasize the diverse responses and resilience within the European management consulting landscape amidst the economic crisis. Furthermore, the report noted differences in daily fees, demonstrating significant differences between Western and Central and Eastern European countries.

In 2009, the European management consulting market experienced an average decline of 5%. Despite the overall contraction, Germany emerged as the largest market, holding 30.79% of the total turnover. The United Kingdom followed closely behind with 22.48% of the market share. The data revealed considerable variation in performance across different countries. While Germany and the UK led, other countries like Spain also held significant shares, though the exact percentages aren't specified. Romania surprisingly outperformed expectations, although specific figures are not provided. The data underscores the heterogeneity of the management consulting market's response to the global economic downturn, with certain countries demonstrating more resilience than others. This highlights the need for a deeper understanding of the local market dynamics within each nation to better understand the performance discrepancies. The differences may be influenced by various factors, such as the mix of client sectors, the structure of consulting firms, and the level of government support. Further analysis is necessary to pinpoint the exact drivers behind these differences.

The 2008 forecasts for 2009 market performance revealed varying degrees of accuracy across different countries. Some countries demonstrated a high level of precision in their predictions, while others were overly optimistic or pessimistic in their estimations. Notably, France, Slovenia, Switzerland, and the United Kingdom accurately projected their 2009 results. Conversely, Germany, Greece, Portugal, and Hungary underestimated the severity of the recession. Finland and Ireland's forecasting accuracy is not explicitly mentioned in this segment of the report. Looking at the 2009 performance, a wide range of growth rates is observed, from a substantial decrease of -32.6% in Bosnia and Herzegovina to a modest increase of 4.5% in Croatia. Among the fourteen European countries included in this analysis, ten experienced negative growth, while only four reported slight increases, illustrating the uneven impact of the economic crisis on the management consulting sector. These differences reflect various factors, such as sector-specific vulnerability to the economic downturn and the ability of consulting firms to adapt to changing market conditions. Understanding these disparities is critical to developing more accurate future forecasts and implementing effective strategies for market stability.

Analyzing turnover per employee provides further insights into market dynamics. In 2009, twelve countries reported turnover per employee between €60,000 and €150,000, representing 49.95% of the European management consulting market. This group includes Germany, Spain, Austria, Belgium, Portugal, Finland, Ireland, Slovenia, Greece, Croatia, Bulgaria, and Cyprus. Eight countries, however, exceeded €150,000 turnover per employee, accounting for 48.18% of the market. This group consisted of the United Kingdom, France, Sweden, Netherlands, Italy, Denmark, Switzerland, and Norway. This disparity in turnover per employee across countries suggests significant variations in market structure, pricing strategies, and possibly the types of services offered. The data also shows differences between Central and Eastern European countries and those in Western Europe regarding daily fees. This further segmentation provides valuable insights into the nuances of the European management consulting market and facilitates a more detailed understanding of its diverse performance characteristics.

Management consulting firms across Europe adapted to the 2009 economic downturn through various strategies. Cost reduction measures were widely implemented, along with efforts to improve productivity and increase adaptability. A key shift involved tailoring services to meet the specific needs of individual clients, moving away from a standardized, packaged approach. This move toward customized solutions reflects a changing market where flexibility and responsiveness are highly valued. Client expectations also evolved, with a stronger emphasis on demonstrable results and quicker returns on investment. These adaptations demonstrate the sector's ability to evolve in the face of economic adversity. While many firms faced challenges, the overall adaptability displayed suggests a considerable level of resilience within the industry. The willingness to embrace flexible business models and tailor services proved critical to survival and even success for many.

The impact of the economic downturn wasn't uniform across all management consulting service lines. Business Consulting consistently performed well, often generating more than half of the total turnover for many firms. However, other areas faced reduced demand. IT Consulting and outsourcing services, for instance, saw decreased demand in 2009, remaining below 10% of total turnover in some cases. This disparity highlights the varying degrees of vulnerability among different specializations within the management consulting field. Sectors like operational improvement and process re-engineering fared relatively better than others, suggesting a higher demand for cost-cutting and efficiency-enhancing services during times of economic uncertainty. The contrasting performances underscore the importance of specialization and the need for firms to adapt their service portfolios based on evolving market demands and client priorities.

The economic crisis significantly influenced client behavior and procurement practices. In the private sector, many clients postponed or canceled existing consulting projects of a strategic nature, focusing instead on cost-cutting and efficiency-boosting initiatives. This shift towards short-term, cost-saving measures impacted the demand for long-term strategic planning and development services. The public sector was similarly affected, with reduced spending on consulting services and a more cautious approach to procurement, partly due to corruption concerns in some countries. The impact on public procurement is highlighted as a significant factor in the fluctuating demand for consulting services. The report notes that procurement decisions increasingly moved from top management to procurement departments, signifying a shift in decision-making processes and potentially a heightened focus on cost-effectiveness and contractual specifications. These changes emphasize the evolving landscape of client-consultant relationships and the need for adaptability in securing and managing projects.

Despite the overall negative impact of the 2009 economic crisis on the European management consulting market, Croatia demonstrated resilience, achieving a 4.5% growth rate. The total turnover for the management consulting market in Croatia reached €114.5 million. Business consulting was the leading service area, contributing 36% to the total turnover, followed by IT consulting (21%) and outsourcing (20%). Other service areas, including Development & Integration and Other Services, contributed 16% and 7% respectively. Key client sectors were Industry (24%), Banking & Insurance (15%), and the Public sector (12%). Croatia's success was attributed to various strategic measures adopted by consulting firms: cost-cutting, exploring new market niches, innovative marketing, and the implementation of flexible payment policies. The high percentage of consultants (89%) within the total workforce underscores the focus on direct client service delivery in Croatia's consulting market. Export activity accounted for 9.7% of total turnover, with only 0.3% directed to non-EU countries.

Denmark's management consulting market experienced a downturn in 2009, with a -3.6% growth rate following a strong 8.8% growth in 2008. The total turnover amounted to €2,107 million. The private sector, especially manufacturing, showed a considerable decrease in new projects and delays in existing ones. However, the report highlights a contrasting trend. Demand for consulting services rose sharply in the latter half of the year, reaching an all-time high by year-end. This recovery was primarily driven by the private sector, particularly the industry, which accounted for 42.1% of the demand. Business consulting dominated the market, contributing 60.6% to the total turnover. Smaller and specialized firms were especially resilient, demonstrating their ability to tailor their services and pricing to meet client needs during the economic crisis. While large companies and those in the IT and HR sectors suffered, smaller firms specializing in strategy, operations management, and change management experienced less significant reductions in demand, suggesting these areas retained a crucial role in navigating economic challenges.

Germany's management consulting market experienced a modest decline of -2.7%, with a total turnover of €25,780 million in 2009. Business consulting was the primary service line, generating 52.9% of the total turnover. The Industry sector formed the largest client base, accounting for 31.6% of the demand for consulting services. In contrast, Greece experienced a much steeper decline of -9.2%, illustrating the varied impact of the economic crisis across different European economies. Business consulting comprised 73.5% of total turnover, while the public and industry sectors formed the most significant client segments. Greece's export activity was notable (18.8%), with European countries accounting for 11.5%. Hungary experienced one of the most severe declines, with a -22.2% growth rate in 2009. Demand for consulting services fell significantly in the private sector due to the deep recession; the public sector was more cautious due to corruption scandals, although EU funding offered some limited support. Business consulting (54%) and IT consulting (32%) were the most significant service lines.

Ireland's management consulting market, estimated at €363 million in 2009, showed growth mainly due to the inclusion of additional firms in the survey rather than market expansion itself. Business consulting dominated (52%), followed by IT consulting (18%), while outsourcing was significantly under-reported. Portugal’s economy faced challenges including increased unemployment and a public deficit. Government programs supporting SMEs and infrastructure renewal were implemented. The major client sectors were industry, construction, and public administration. Project management, strategic consulting, and operations management services were in high demand. Slovenia's management consulting market showed a slight increase (1.5%), despite reduced growth overall. Demand was focused on improving competitive advantage through cost optimization strategies. Financial services companies were major clients. The United Kingdom witnessed its most challenging year ever; demand fell across most private and some public sectors. Smaller firms suffered initially, but many adapted successfully. Niche firms benefited from price pressure later in the year.