Transcript national markets > growth GDP, but there is a wide disparity in the

European Trends in
Management Consulting
Antoine Beuve-Méry, IBM- Belgium, Chairman of Feaco
Feaco annual conference
Budapest, 8-10 November 2006
9 November 2006
1
feaco
Market trends: The Background
 Significant impact of globalization and of ever faster innovation
 Innovation is everywhere (traditional R&D BUT ALSO in new business
models)
 Ever increasing role of technology  high degree of adaptability is a MUST
 Globalization impacts our clients and our industry
 Best shoring is becoming standard practice for consultants AND for their clients
 Economies grow at different paces
 Western Europe
 Central Europe
 China India, Far East
 Consulting industry is changing fast but has a bright future
 Support / assistance to innovation & change remains in high demand
 Strong demand as well in outsourcing an best shoring
 To actually take over some non core process’
 IT, Finance, HR, cal centers, other support process’…
 To support change associated to best shoring
9 November 2006
2
feaco
Feaco survey
Market growth 1997-2005
9 November 2006
3
feaco
Feaco survey
MC market size by country/region
9 November 2006
4
feaco
Feaco survey
What hides behind these charts ?
 14% average growth rate in 2005, partially due to a redefinition of the
scope of the MC market
 Wide disparity in growth between countries
 Growth of MC EU and (most) national markets > growth GDP, but there is
a wide disparity in the part of national GDP that MC represents
 An a-typical market: few very large players, very many very small
players; which keeps concentrating
 National markets, and the ways in which they are developing, are unique
9 November 2006
5
feaco
FEACO Survey
Common trends

Main drivers: economic growth and stability, the increased export to Eastern European
countries, accession to the EU,

Driving sectors: the public sector and the Financial Services sector

Consulting services are reaching maturity in most countries.

Increased loyalty from clients towards consultants. Experience is a key element for choosing
a consultancy. Clients are clearer about their requirements and interested in measurable
results.

Short-term projects are still dominating most markets, but there is a shift towards more longterm projects.

Fee rates are still under pressure.

quality is essential to be able to compete in the marketplace. Ethics and professionalism also
play an important role in the selection of a consultant.

trend towards investment in new projects, especially in the countries that reported good
market growth..

The EU expansion was generally judged as having a positive effect on the market.
9 November 2006
6
feaco
MC Industry trends: Other considerations
 A word of caution: The crystal ball is still a myth…
 Looking forward:
 Expect continuation of 2005 trend for 2006 & 2007
 Top markets remaining UK, Germany France, Italy, and Central Europe
 Consulting Industry is on slow but clear consolidation trend
 More acute in the IT consulting industry
 Appearance of the Indian players willing to increase foot print in Europe
 The hot topics
 Growth vs cost reduction
 R&D & Customer interaction vs Operations (supply chain, procurement
etc)
 Strategy (IT & global growth), Perf. Mgt & Business intelligence, SOA
enabling easier and cheaper data exchange internally and externally
(driving major changes in process and innovation)
9 November 2006
7
feaco
Market trends: Other considerations
 BPO still a very hot topic (cf process innovation even as part of SSC
set-up)
 Important source of revenue short and mid term
 Competition between “Outsourcers” and Consultants specialized in Outsourcing
advisory
 Latter assist in:
 preparation of deals / selection of outsourcers (to avoid conflicts of interest with
the “big players”)
 PMO support / QA / X-cultural support
 Outsourcers claim they can do it all
 Change Mgt and organizational support for
 the locally remaining operations
 In the X-cultural working relationships
 Potential important role in support of / cooperation with the Indian based big players
 Ever existing debate / competition between BPO transformational outsourcing
VS Transform and outsource
 Potential issue on the longer term? Not really
 Limited as not every corporation is culturally ready for outsourcing (evolution
process over time)
 Consulting lives out of change … There will be a next wave
9 November 2006
8
feaco
Market trends: Other considerations
 Best Shoring is here to stay
 Reserves of top educated brains in India and China are limitless
 Not limited to IT, e.g. presently leveraged
 By the strategic consulting firms for their desktop research
 For multilingual and translation purposes
 For development and delivery of e-learning
 Big Indian players are more and more present and aggressive
 Develop higher value added commercial proposition
 Are hardly visible as rarely part of local associations
 The reborn of the big 4 consulting practices, BAS
 M&A, Business planning & Perf. Mgt, FOI, BPR, Risk management…
 Growing faster than the rest of consulting,
 Business anchored on broad financial skills,
 Remaining distant from Business model transformation involving IT except for
PMO & Change Mgt support – Public Sector is a potential exception
 Other Key players are
 Local MC firms potentially members of X-borders networks
 “Value added system integrators” focusing on local process
improvements, not on Business model innovations
9 November 2006
9
feaco
Market trends: Other considerations
 Fee discounting still present but becoming less of an issue
 Exist overcapacity in some segments
 Best Shoring impact on gross numbers, but delivering higher profitability
 Consulting “come back” as a good lever to facilitate & accelerate
change
 Engagement size
 Ever present need to get support
9 November 2006
10
feaco