New report finds the Boston Consulting Group is best positioned for growth, followed by PwC and Deloitte.
European consulting market may be set for strong growth, say clients
LONDON -- Despite the tough market for European consulting firms, a Sourceforconsulting.com report released today (14th March 2012), and based on the views of more than 400 C-suite and director-level clients across Europe and the Middle East, has found that the majority (95 per cent) of management consultancy clients have either no plans to reduce the level of consulting, or they plan to increase it significantly.
This expected increase in demand is not being driven by the need for new skills or a major change programme, but because clients expect the line between what is internal and what is external to be re-drawn. Cutting the number of permanent employees they employ will mean relying more on outside companies. But the report is quick to point out that consulting firms will have to be prepared to change the services they offer, the role they play, or even their operating model, in order to take advantage.
BCG best positioned for growth
The report also ranks 11 of the biggest global consulting firms, according to how well clients feel each is positioned to tap into the potential for growth. The Boston Consulting Group came top, a result both of the high regard which clients have for the firm generally, and the fact that it is seen to be increasingly capable of diversifying by role and delivery model.
PwC – the front runner out of the Big Four
There is, says the report, little to separate PwC from Deloitte – something that is a problem for both firms – but the former have the edge at the moment on the back of especially favourable views amongst clients about the quality of its people.
Source co-Founder Fiona Czerniawska commented: “Despite the malaise of the consulting industry in many parts of Europe, and the widespread perception that demand for consulting in the region is likely to grow slowly at best in 2012, we believe that the potential for longer-term growth is much greater. This may be akin to the explosion of activity which fuelled the consulting industry in the early 1990s, as pressure on headcount forced managers to re-draw the boundaries between what they made and what they bought.”
Huge reliance on consultants to validate difficult decisions
When looking at why clients are buying consulting, a third of all consulting continues to be driven by clients’ need to access specialist skills. However, around a sixth stems directly from a need to have difficult decisions validated and defended to internal and external stakeholders. The report says that it is clear that CEOs and their board directors see this simply as part of doing business. It’s a trend that is especially marked in the financial and resources sectors (primary industries, energy and utilities) and amongst strategy, finance and risk managers. What it does is to make people in these sectors and functional areas extremely brand-conscious when it comes to their choice of consulting firm, something that goes a long way to explaining why reputation and relationships are something the biggest consulting firms are so keen to manage well.
One strategy and operations director commented: “One of the main reasons why we’d bring in one of the well-known strategy firms is that there’s a difficult, even contentious, message we need to get across internally and/or externally. These people can articulate it better than we can – and they’re also more likely to be believed because they’re independent outsiders. 50% of this work is genuinely helpful; 50% is just to make us look better.”
A different form of collaboration is emerging
One of the most significant changes to the way clients are using consultants comes in the way they expect to use external help for implementation. Despite virtually every consulting firm laying claim to its unique ability to bridge the gap between advice and implementation, the report suggests that clients remain unconvinced. Indeed they appear to have very sophisticated views about the role they want consultants to play, something which is informed by the increasing access many clients now have to internal consulting resources. Four-fifths now expect consultants to work in collaboration with internal consulting units while about two-fifths expect them to manage internal teams of people. These shifting needs don’t simply affect the amount of money organisations spend with external consulting firms, they also go a long way to determining the types of firms they use in the first place.
Some of the other key findings included:
• International work – the report estimates that, overall, around a third of all consulting work has an international component to it – and that this is likely to grow.
• Clients see a clear relationship between price and value, and will either push prices down or allow them to rise depending on the gap between the two.
• There are three main ways in which consulting firms can diversify in order to take advantage of the opportunities for growth: by service, by role and by delivery model.read more