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Brazilian consulting up 8% in 2012 - anticipates World Cup bounce

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London: Despite tight margins and economic pressures, the consulting market in Brazil grew at a healthy 8 per cent to $1.4bn in 2012, according to new research — far outpacing Brazilian GDP (0.9 per cent).

A report released today by specialist consulting research group Source Information Services says that between 2011-2012 businesses have been less eager to invest in consulting, and therefore price competition, and lower margins, has become a prominent feature of the market as firms fight to hang onto their market share.

However, many consulting firms anticipate a further bump in business as both public and private clients get back to the business of preparing the country for the upcoming World Cup and Olympics. Source found that by Autumn 2013, some consulting firms were already beginning to report an uptick in business, but it says that this may have more to do with clients adjusting to the new reality than any real economic improvement.

The Source report says that for those consulting firms with the resources, the Brazilian market still looks like a good bet.

B.J Richards, a Senior Analyst at Source and author of the report commented, "The multinational corporates that make up the base of Brazil's consulting market are continuing to invest and grow despite the recent economic woes. In particular, those consulting firms that are able to deliver tangible results, via a strategy of employing a global perspective with a local touch, will find these newcomers to be very fertile ground."

Largest sectors remain strong

The traditionally strong sectors for consultants continued to grow in Brazil — with Financial Services up 9 per cent to $293m, Energy and Resources up 5 per cent to $253m, and Manufacturing up 6 per cent to $241m. Modernisation in the financial services sector helped it weather the 2008 global meltdown, but today, keeping up with regulation and embracing the opportunities of digital mean that this is likely to continue to be a strong sector for consultants.

In addition to the traditionally strong industry sectors, consultants were also in demand in smaller sectors — with Public and Private healthcare — up 12 per cent to $149m, Retail up 10 per cent to $93m, and Pharma and Biotech up 12 per cent to $46m. The Source report says that as Brazilians grow richer, they are also becoming healthier, and demand for healthcare and innovative medicines is rising. As a result, there has been an expansion in healthcare services and the Brazilian pharmaceutical market is now the second largest in the emerging world.

Whilst eight per cent growth in Brazil doesn't compare with its historic highs, it still looks good when compared to much of the West, and the firms that are getting it right in Brazil are still prospering. Frank Meylan, Partner in Charge of Management Consulting, KPMG Brazil, who was interviewed for the report, comments, "In the last year, we've had great growth in Brazil. The economy isn't growing so well, but we experienced double digit growth. We're growing more than the market, so it's been a great year."

Consolidation and growth agenda influences the demand for services

Those services in demand are partly being influenced by the economic slowdown, which has led to consolidation — fuelling demand for M&A, post-merger integration, and efficiency consulting services. Operational Improvement has therefore increased 8 per cent to $442m, Technology was up 10 per cent to $359m, and Financial Management and Risk rose 9 per cent to $360m.

For more information on Source reports contact alice.noyelle@sourceforconsulting.com, telephone +44 (0)20 3178 6443 or go here.

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