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DACH consulting market breaks €8bn barrier in 2014, says Source


A new study from Source Information Services (Source) says that the management consulting market in the DACH region expanded by 6.4 per cent to over €8bn in 2014.

Growth was strongest in the region's two largest markets, Germany (€6.5bn) and Switzerland (€818m). They both recorded above market growth, 6.5 per cent and 7 per cent respectively. The region's smallest consulting market, Austria, recorded relatively low growth of 2 per cent to reach a value of €253m in 2014, largely due to its exposure to volatility from Eastern Europe and Russia.

The Source report also found that it was a good year for consultants in every sector, but it was especially good for DACH's main sectors; manufacturing and financial services. Manufacturing grew by 7.8 per cent to €1.9bn and financial services recorded 8.3 per cent growth to €2.8bn, buoying the overall consulting market's performance. Pharma and biotech, although much smaller, managed the highest level of growth at 8.9 per cent to €250m.

Alexander Lippner, Partner at KPMG, who was interviewed for the report, commented:
"Financial services is the strongest sector at the moment for us, because it's undergoing significant transformation. Some of that is driven by significant restructuring work, the other part is coming from regulatory pressures."

Dr Fiona Czerniawska from Source explained: "Intense competition, price pressure, and increasingly sophisticated client buyers are causing consulting firms to re-examine their business models. Like many other mature markets, the bifurcation between what we call 'luxury' and commoditised consulting is putting pressure on firms that still try to do it all and causing many to consider which part of the market to pursue. As a result, there's been a rise in asset-based consulting and in firms flexing resourcing models to offer clients greater flexibility."

Strategy dominates

Strategy remains the largest consulting service in the DACH region, but it's growing slightly behind the rate of the market (4.9 per cent to €2.6bn). Technology (€2.1bn) and financial management and risk (€799m) are the stand-out services, growing respectively at 8.4 per cent and 9.1 per cent.

All consulting firm types saw good levels of growth over 2014, but it was type A firms (consulting firms who deal with audit, tax, and corporate finance services, mainly the Big Four) that had the best year, growing at 9.3 per cent. Their success was fuelled both by organic growth — particularly as this firm type's heartland of financial management and risk is in such high demand — and inorganic growth, as these firms snap up smaller firms with prized specialisms.

Dr Czerniawska said: "Despite many potential hiccoughs, a slowdown in China, 'Grexit' fears, and exposure to instability in Eastern Europe, we think DACH will exceed 2014's growth figures to grow by about 8 per cent in 2015."

Christian Koehler, Partner at Strategy Engineers, added: "I think Germany is a very stable, mature, and sophisticated market. They're mature buyers in the automotive industry — there are almost no surprises in this market. It's very competitive — we always see the usual competitors, and generally everyone gets their fair share."

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