Market conditions

By Zoë Stumpf.

Reflecting on a recent trip to Dubai, I realise that it’s not very often that you hear someone in that part of the world talking about things being “too big”. From the 828m-high Burj Khalifa—still the tallest building in the world—to the supersized, super-stocked aquarium in the Dubai Mall, to the Palm—one of the world’s largest artificial islands, “too big” is the region’s version of “just right”.

But there’s clearly a different kind of “just right” when it comes to oil prices—at least as far as the consulting market is concerned.

By Julie Ahadi.

Every year, we evaluate the attractiveness of each consulting market in response to a simple question: Looking at the next 12 months only, where should you invest? The results for 2019 are in, and taking pole position for the fourth year in a row is the DACH region (Germany, Austria, Switzerland). Beating 17 other contenders to the top spot, the DACH market has even managed to widen its lead over the second-placed market, which this year is the US. A solid performance then. But what’s so good about the DACH consulting market? And are there any reasons to be cautious?

By Callum Jack.

The Japan market—a tough nut to crack for consulting firms in the past—is generating quite a buzz. As organisations start to use consultants more than ever before, consulting firms are sensing huge opportunities and are acting fast, which is intensifying competition.

In the past, Japanese business leaders were loath to spend on consultants for two reasons. First, the culture of international consulting firms didn’t always fit with the Japanese way of doing things. Differences in etiquette, hierarchical structures, and decision-making processes made it very difficult for firms to build strong client relationships. Second, Japanese clients—already sceptical about buying anything intangible—didn’t see the value in buying consulting advice if you couldn’t measure its impact. As a result, the Japan consulting market, valued at just US$1.4bn, is much smaller than its counterparts in other mature economies like the UK, where the consulting market is worth US$10bn and in a much smaller economy.

These challenges have hitherto prevented international consulting firms from really pushing to establish their presence in Japan. However, many of the consulting leaders we’ve spoken with recently are now investing heavily in Japan, and they cite four reasons for their new-found optimism.

By Julie Ahadi.

“Overall, a customer-centric focus is the biggest change in the financial services market in recent years” …said a consultant we spoke to for our 2018 financial services sector market report. And we don’t disagree with her: In fact, the general realisation that putting customers first is key to winning—and staying in—business is spreading like cross-sector wildfire.

With the likes of Amazon, Facebook, and Google leading the charge in delivering A-grade customer experience, the general population has, in a very short space of time, come to expect this level of service as standard. Technology players in other sectors—such as retail—are adopting cutting-edge approaches to improve the customer experience, and this is forcing financial services players to up their game considerably. And there are no exceptions to this rule: Got a huge, immovable legacy system that makes changing existing IT architecture and implementing new systems painful, slow, and expensive? Too bad. Lack the agility to make far-reaching changes in your culture or operations? Boo-hoo. Customers’ insatiable appetite for a simple and immediate banking experience isn’t about to go away anytime… well, ever.

By Edward Haigh.

Contrary to what Bloomberg recently reported me as saying, I don’t think Amazon and Google are poised to become auditors.

I can be fairly certain about this, because both firms’ recent achievements strongly point to the idea that a degree of sanity prevails in their leadership. And nobody in their right mind would actually choose to be an auditor any more, would they?

I suppose I ought to concede that auditors would. For them, the mechanics of the industry work pretty well: Governments oblige companies to buy a very expensive service, every year, from a market in which, for various reasons, there are basically four players. It’s like a dream come true. Well, apart from the actual auditing itself.

For everyone else it must look like a complete nightmare: You’ll spend your life performing soul-crushingly tedious work while being watched over by regulators, governments, shareholders, and the media; you’ll get fined, or even imprisoned, when you get things wrong, and ignored when you get things right; and your clients will be desperate for the day when they can replace you with a robot that does in five minutes what you do in six months, and which charges by the hour. Which might be next Tuesday at this rate. I mean, seriously, you just wouldn’t, would you?

By Julie Ahadi.

In a break to the norm, and to give ourselves a rest from barking on about digital, we thought it might be interesting to look at one of the major standout non-trends unearthed by our 2018 Australia Consulting Market report*: the flatlining and blink-and-you-may-miss-it performance of people (HR) firms. And it’s pretty dire.

Claiming just 1% of market share, it’s abundantly clear that traditional HR firms haven’t quite managed to acquire the agility needed to outmanoeuvre the Big Four and strategy firms—and anyone else with a killer instinct—to keep pace with the times and remain relevant.

Why? Well, both in Australia and around the world, HR consulting has seen relatively slow growth in recent years, as clients’ need for support in this area has either been piecemeal or generally just lower down the list than, well, pretty much anything else you can think of.

By Lindsay Stark.

The Eastern Europe consulting market experienced a solid year in 2017, resulting in every market in the region growing faster than in 2016, and overall growth of 6.7%. Although the region still continues to lag behind Western Europe in the digital space, digital transformation proved to be one of the major drivers of consulting demand, as clients strove to reduce costs and drive efficiency. Digital initiatives accounted for 23% of the region’s consulting revenues in 2017, up 13% on 2016’s numbers.

By Fiona Czerniawska.

In 1610, after months of painstaking work grinding his own lens, Galileo Galilei finally held his new telescope up to the night sky. What he saw astonished him: instead of a few hundred stars, he could see thousands, even millions.

The consulting “universe” has long been populated by a small number of large “planets”–strategy, technology, operational improvement, and so on–but if you were to carry out an equivalent of Galileo’s exercise in today’s market, then you’d see something that looks more like the Milky Way than a simple solar system.

The consulting market is fragmenting. Centrifugal forces are breaking up our familiar planets, based on the precise expertise required, on a changing sense of what a “reasonable” price is, and on a new generation of clients who know that the way they want to buy from consulting firms isn’t necessarily how the firm wants to sell or deliver to them.

By B.J. Richards.

For all President Trump’s shortcomings (and I, for one, have been known to go hoarse expounding them), his administration has thus far proven a pretty darn good deal for America’s consultants. So far, the economy has continued to look sharp; a rather, uh, relaxed approach to regulation has allowed compliance-wary businesses to shift their focus to other priorities; and a tax overhaul that one might modestly describe as “business-friendly” has freed up a whole lot of corporate cash that’s being eagerly poured into growth, technology, and operational improvement initiatives. So far, it seems consultants have had little reason to complain. Indeed, after getting off to a slow start (much of that owing to clients wanting to find their feet in Trumplandia before making any big moves), the US consulting market grew an impressive 8% last year and looks on track to do even better in 2018. Huzzah!

By Ashok Patel.

Since his election in May 2017, French president Emmanuel Macron has set about implementing his populist reform agenda for both the public sector and the labour code—neither of which are simple or easy tasks in France.

Whether you agree with his politics and his policies is up to you, but two things consultants we spoke with in France agreed on were that the consulting market in France was on the rise last year and that Macron’s government played a key role in that growth.

The decisive victory for both the man and his party in the presidential and parliamentary elections not only altered France’s political landscape, but also changed its business environment and the consulting market. And while the previous administration, under François Hollande, may have started the ball rolling with its 2016 tax cuts, the rate of spending by companies and investors alike quickly accelerated under Macron’s government as it took the first steps in reforming taxation and labour laws.