London: The consulting market in France grew by 2.4 per cent in 2014 to more than €4billion, its best performance since the start of the global financial crisis, according to a new study from Source Information Services (Source).
However, despite this encouraging growth rate, the Source says that while some firms did very well, others struggled in what is still a tough market. And against the backdrop of a lacklustre French economy, Source forecasts that growth is unlikely to increase further in 2015.
Much of the growth in the market in 2014 came from multinational clients — benefiting big consulting firms rather than smaller specialists. Starved of growth opportunities in France, clients are looking overseas to improve their fortunes, and often want a consulting firm with a global reach to match. But there are still opportunities for small and mid-sized firms, and those that offer sufficiently specialised services in high demand areas found themselves taking market share too.
Alison Huntington, Senior Analyst from Source explained: "Consultants are telling us that if you know where to look, there are opportunities in France. Firms are also making changes to their business models to improve their appeal in the market: some firms are developing assets to meet particular client needs, others are developing tools to deepen the insight they can deliver to clients. It's leading to questions about how to address the polarisation of the consulting market, and whether one firm can offer both commoditised and high end services."
Financial management and risk grows at almost twice the market rate
Financial management and risk, which grew at 4.3 per cent to €626million — expanded at almost twice the market growth rate thanks to steady demand for regulation work and a major upswing in risk and cybersecurity consulting. Francois Marchessaux, Partner at Colombus Consulting told Source: "We believe that the cyber security consulting market is growing by 10 per cent, and it's all driven by digital."
Technology, the largest service in France, managed modest growth of 2.4 per cent to over €1.3billion and this was systematic of all service sectors apart from financial management and risk.
The Source report also found that the majority of the sectors experienced some growth in 2014, but energy and resources, financial services, and pharma and biotech grew especially well. Financial services, France's largest sector grew 3.3 per cent to €1.2billion in 2014 with Eric Mouchous, Lead Advisory Partner for France, Luxembourg and Maghreb at EY telling Source: "Financial services performed very well in 2014, helped by the regulatory environment. There were lots of projects linked to that. But there was also a lot being driven by the digital wave — a lot of digital transformation projects."
Energy and resources, the fourth largest sector in the market grew the fastest, expanding by 4.5 per cent in 2014 to €474million due to a combination of regulation, new technology, and the need for cost cutting which means many clients in this sector are undertaking transformation projects. The consulting market hasn't felt the impact of falling oil prices — yet.
Alison Huntington commented: "Despite consultants being reasonably optimistic about the prospects for the French consulting market in the next 18 months, while macro-economic factors remain as challenging as they are it's hard to see the rate of growth increasing further for the time being. But interest in digital transformation should keep the market heading in the right direction to some degree."