London: A new report released yesterday shows that the rate of growth in the Nordic consulting market increased to 3.7 per cent in 2013, with the market now worth more than €2.2bn. The report says that an improving economic situation is behind much of this — particularly in Sweden and Denmark — the biggest markets for consulting in the Nordics.
The Source Information Services (Source) report also found that following a difficult year in 2012, Sweden, which is the biggest consulting market in the Nordics, was the fastest growing in 2013. Sweden's growth rate in 2013 (4.8 per cent) almost doubled that of the previous year. This Swedish market is now worth €863m and its rate of growth puts it on a par with the growth rate of the UK consulting market. In contrast, Denmark grew by 3.7 per cent to €623m, Norway grew by 3.3 per cent to €479m, and Finland grew by just 0.8 per cent to €275m.
The report also found that the biggest (global) clients are once again the ones propelling the industry forward, to the extent that many believe the link between the fortunes of the consulting market and the economies of Nordic countries is being broken. The report says that what matters now is less about what's happening to Danish GDP and more what's happening to Maersk. This shift from a local to a global focus, is creating a strong demand for advice from the Big Four firms in particular.
Edward Haigh, a director of Source said, "As Nordic clients become more global in outlook, so they appear to become increasingly predisposed to the idea of using consultants. Arguably the most striking finding amongst all of our research across the region this year is the fact that Nordic clients are now significantly more likely than their global counterparts to turn to consultants for help. And the type of project for which the increase in that predisposition is greatest is telling, too: culture change."
Terje Andersen, Partner, EY, who was interviewed for the report, added, "A lot of our clients don't care about the idea of being Nordic now — they consider themselves global. The Nordic part is simply the steppingstone to a more global world."
Alisdair Munro, Director Knowledge & Technology, Virke — The Norwegian Enterprise Federation, and Head of Consulting Norge, commented, "Consulting firms have had a very strong year, but the second half of 2013 is what really drove growth with several firms even reporting double digit growth — well above the Nordic average. The public sector's demand for consultants also outpaced the market as the new Government launched major digital and citizen centric projects across central government and into other parts of the public sector. The consulting industry has also seen very good first quarter growth in 2014, which is continuing into the second quarter."
Energy and Resources was the fastest growing sector — up 6.4 per cent in 2013, and the region's healthcare challenges are also making for a buoyant market with 6.2 per cent growth registered. However, the report says that neither of these are especially big markets, so to really see strong growth once again — the Nordic region needs to see growth in the manufacturing, financial services and the public sector.
From the key market sectors, the public sector was the fastest growing, increasing by 4.8 per cent to €456m. The report says that whilst a lot of public sector consulting work in the Nordics is for central government, demand can come from elsewhere — from areas like defence. In Sweden, as elsewhere, work at the moment is centred on the citizen, and consultants talk about the need to support this with transformation programmes and cost cutting initiatives, as well as strategies to get the best out of technology. Provided that transformation rather than cost cutting remains at the fore, growth should continue at the same rate in 2014.
Technology (up 5.1 per cent) and operational improvement (up 5.5 per cent) are the services most in demand. The report says that interest in technology continues to shift away from big, enterprise-wide systems and towards a more fragmented world in which new technologies like cloud, social media and mobile dominate. That's leading to a corresponding shift of interest in technology, and of technology consulting, away from the IT function and into other parts of clients' organisations. Meanwhile, in operational improvement the focus appears to be shifting away from cost-cutting and towards efficiency, productivity and simplification.
Future growth expected
While consulting spend will no doubt be subjected to intense scrutiny, Source concludes that because of the underlying drivers in the Nordics: there's a lot going on, and a striking willingness to use consultants across the region at the moment, it expects continued levels of modest growth.
John Condon, International Global Advisory COO and EMA Head of Advisory, KPMG concluded, "Every firm in the region seems very optimistic that growth will continue in 2014-15."