London: Research released today shows that the DACH (German speaking Europe) consulting market grew by 5.9 per cent to €7,341m in 2013 — a rate which is impressive by current global standards. Switzerland grew at the fastest rate — up 6.7 per cent to €808m, with Germany also showing strong growth at 5.9 per cent to €6,281m.
The report from leading global consulting market analysts Source Information Services (Source), also found that sector growth came from the region's iconic financial services sector (up 8.2 per cent to €2,194m) and manufacturing industries (up 7.1 per cent to €1,886m). Pharma and biotech (up 7.3 per cent to €282m) is also growing ahead of the market, albeit from a significantly smaller base.
The report says that in financial services, where there is evidence that banks are doing more work for themselves, they are still spending on consultancy advice for regulatory compliance and strategy work. For instance, in Switzerland, new legislation around banking secrecy is the source of major change. Fallout is likely to include a reduction in the number of banks operating in the market, and these reforms will also drive M&A work.
Holger Greif, Consulting Leader, PwC, said, "Financial services clients are returning to the growth mode, and that's why digital is getting higher on the agenda. They're interested in customer centricity and multi-channelling."
Strategy still biggest area
Strategy consulting continues to be the biggest service area in DACH (up 3.9 per cent to €2,328m). Finding new opportunities for growth was partly behind this demand, but corporate restructuring following merger or insolvency was also a key theme.
Edward Haigh, Director of Source said, "The businesses of DACH have learned the hard lessons of the crisis well and are ready to make big investments in the interest of avoiding being caught unprepared again. This is leading to a lot of consulting work — including big transformation projects — around helping client organisations to become more flexible. Businesses are also tackling large-scale change around IT integration, digitisation, and the global growth agenda."
The Source report also found that technology consulting, which includes rapidly expanding digital consulting, grew by 7.7 per cent to €1,927m. The report says that digitisation, mobile, cloud, and analytics are all major drivers of larger transformation projects, and this is where consultancy advice is crucial.
Christine Ciriani, Partner, Capco said, "New technology is driving demand — innovation has been as important a theme as cost reduction, industrialisation and regulation. There is increased interest in investment both in terms of using technology to optimise regulatory compliance particularly across global networks but also to add additional distribution channels."
With a mature consulting market, the report says that DACH is a very competitive place to do business, and an oversupply of consulting means that consolidation has become a major factor shaping the market and one that shows little sign of abating. Local acquisitions have become commonplace, and the big, global acquisitions are felt here more than in many other markets simply because all the players are present.
Looking to the future, the Source client survey supports the optimism of DACH consultants as 43 per cent of consulting clients say they expect their spending to increase in 2014. This is a very robust projection compared to client expectations globally, where only 38 per cent say they expect their spending to go up. Source predicts growth prospects for the region in 2014 of 5-10 per cent.