Can consulting manage Brexit?
Home » News » Economy slows Brazil consulting

Slowing economy hinders the Brazilian consulting sector: Source


The recent election and the delayed impact of the global financial crisis contributed to a slowdown in Brazil's consulting market. Following growth of 5.7 per cent in 2013 to $1,532m, the sector is estimated to grow by just 2.6 per cent in 2014.

These findings are published in a new report by leading global consulting market analysts, Source Information Services (Source). Source says that during 2013 growth related consulting services were in greatest demand, but a slowing economy has seen more of a focus on operational efficiency and business transformation, with digitisation playing a key role.

The fastest growing industry sector for consultants in 2013 was healthcare — increasing by 9 per cent. Despite only being worth $35m the report says that with the growing middle classes demanding better services, this could be the fastest-growing sector in 2014/15. Financial services, the largest consulting sector in Brazil grew strongly — up 8 per cent to $431m.

The report also says the slowdown in the consulting market is due to internal factors such as poor infrastructure, excessive red tape and a convoluted tax system.

Alison Huntington, a Senior Analyst from Source Information Services, said: "Clients in Brazil are showing a much more cautious approach to spending on projects. They are spending more time considering proposals to make sure the value is clearly articulated. Client hesitation to spend means that consultants are seeing lower conversion rates. Time is money, and more of it is being spent on proposals with a lower chance of turning into work, which is very frustrating for partners trying to plan ahead."

Trying to take away the risk...

One recent trend in Brazil has seen clients start to adopt a risk reward approach to consulting projects. As the recession bites for organisations more and more want to demonstrate a return on investment and will request KPIs to measure benefits and determine fees. Other clients are paying a percentage of money saved to firms and some consulting firms are even foregoing fees and taking equity stakes in client organisations.

Silvana Machado Head of A.T. Kearney Brazil explains: "Sometimes the client can end up paying more when fees are related to KPIs, but they are paying from a gain that they have already realised."

Alison Huntington added: "Consulting firms are telling us they are switching their attentions to cost cutting, productivity and efficiency projects — many of which are being driven by technology as clients are now more aware of how technology can transform their business.

"Operational improvement, technology, and the financial management and risk sectors are growing faster than any others and we expect financial management and risk to continue expanding at a considerable rate."

Share this article