London: The southern European consulting market is, not surprisingly, in the doldrums, buffeted by on-going economic turbulence and public sector cuts, confirms a new report released today by specialist consulting research firm Source.
Source says that Italy's consulting market contracted by 6 per cent between 2011 and 2012 to €1.048billion. During the same period, Spain's consulting market fell by 3 per cent to €1.103billion.
The Source report and analysis predicts that while the market is unlikely to pick up during 2013-14, it is unlikely to fall further. The report says that the public sector consulting market was the biggest casualty in 2012, falling by 14 per cent in Spain and as much as 19 per cent in Italy.
In contrast, a more positive picture was found in parts of the private sector, with the energy and resources sector growing by a modest 1-2 per cent. The report found that all other sectors limped along, generally suffering a slight contraction, but it was notable that Italy suffered more than Spain. Source says that this is possibly because of a more fragmented consulting and client market.
Edward Haigh, a director of Source and an author of the report commented, "If consulting firms want to survive, let alone grow, they will need to focus on delivering tangible results, assisting clients to explore new international markets and taking an active approach to winning new business. It won't be easy though — the pressure on prices and projects is high, competition from an oversupply of consultants is intense and the economic situation is a constant threat."
In terms of consulting services, strategy, HR and change management shrank, as did programme management — largely due to no budgets for large programmes. However, the report says that it's not been all bleak: with demand across a number of services driven by international expansion, a significant factor behind the slight uplift in marketing and selling.
Financial Services — performance of biggest market
Financial services, the largest consulting market in Spain helped with overall market performance as it grew by 1 per cent to €276million. This was largely as a result of mergers and acquisitions — which drove demand for post-merger integration work — a traditionally strong ground for management consultants. However, in Italy consulting in the financial services sector dropped by 5 per cent to €288million.
Despite the key markets in Southern Europe facing strong head winds, there is optimism from many consulting firms that 2013 will be better. Elisabeth Roux from Penna PLC, comments, "It's been a hard year — but things are picking up again — new things regarding exec search, leadership and coaching. And I think that this year will be a good one — better than 2012. The problem we have is that motivation is the key issue in Spain right now — really hard to work on."
Similarly, Oliver Galea, from PwC said: "We're looking for an improvement in the market in 2013, probably in the second half of the year."