London: Turkey's consulting market performed strongly in 2013, growing by 8 per cent to $410m -twice the speed of the economy (3.8 per cent) — according to new research. Financial services, Turkey's largest sector for consultants remained strong — reaching a value of $129m.
The report from leading global consulting market analysts Source Information Services, Source, says that while this sounds like Turkey is a consulting promised land — compared to lacklustre performances in many European markets — the reality is that it is very volatile, both economically and politically.
The report also reveals that the corruption scandal, combined with the usual decision-making hiatus in the run-up to the August elections meant many projects were put on hold in early 2014 as cautious investors adopted a wait-and-see approach.
Tolga Yaveroglu, Consulting Leader, Deloitte commented: "Last year's turmoil didn't have an immediate impact on us: the effect was more gradual and it was reinforced by the wave of political and economic instability towards the end of the year. Overall, it's had a big impact on investment decisions by both multinational and local corporations. Lots of projects were put on hold, and it wasn't until after the local elections in March this year that business activity started to pick up again."
Work in financial services — which makes up nearly a third (32 per cent) of the Turkish consulting market — required a steady stream of regulatory work. The Source report says that increasing regulation has also spurred banks on to improve their profit margins, and so they are calling on consultants with international experience for help with cost reduction and optimisation projects to improve their bottom line. Source forecasts that financial services consulting will grow at 6 per cent in 2014.
Alison Huntington, Senior Analyst from Source said: "Consultants are seeing demand from Turkish businesses grow rapidly while at the same time enjoying continued strong interest from their traditional multinational clients. While it's always good to be in a growth market, making the most of the opportunities requires a lot of skill and the ability to adapt quickly. This makes such markets fertile ground for consulting teams, whose global knowledge and experience of rapidly implementing change is valued by local and international clients alike."
Finance and risk
Financial Management and risk ($177m) is Turkey's biggest consulting service by a large margin, comprising 43 per cent of all consulting work in 2013. Operational Improvement ($85.7m), which is Turkey's second largest consulting service now makes up a fifth (21 per cent) of the market. The report says that a focus on cost reduction, efficiency, and top-line improvement will continue as clients move from a growth phase and into maturity.
On the regulatory drivers of financial management and risk work, Selim Elhadef, Advisory Service Line & Financial Services Sector Leader, EY Turkey, said: "We have seen changes in regulations, which, as a result, are driving consulting work such as e-record keeping, liberalisation of the energy sector, and tax regulations such as Foreign Account Tax Compliance Act (FATCA)."
Alison Huntington from Source commented:"The Turkish market comes with its challenges. In addition to increasing competition and lower pricing in Turkey, there is also a shortage of local people with the right skills and education for consulting. With the talent pool so small, and intimate knowledge of the Turkish market so critical, consulting firms are competing to attract talent who are not only in high demand domestically but also have plenty of international options."