The Russian management consulting industry has in 2013 booked a growth of 9.2%, taking the market to a total value of €739 million. The outlook for the coming year is not so optimistic though; the sector is expected to contract slightly as a result of the ongoing instability caused by the Ukraine crisis and its aftermath on local spending.
For years now the consulting market of Russia has booked impressive back-to-back growth rates. In 2011 the industry was, according to analyst firm Source, worth just under €580 million. Following a 17% growth in that year and subsequently a 9% growth in 2012, the market last year ended with a value of €739 million. Financial services was the best-performing sector (up 14.2% to €176 million) with work coming from technology-led efficiency projects, large-scale transformations and compliance-related projects. The fastest-growing service area was operational improvement (up 13.5% to €107 million), mainly the result of an aggressive efficiency agenda by clients.
With a value of €739 million the Russian market is larger than the markets of for instance Denmark or Norway, yet still far off the market of the UK – Europe’s biggest consulting market according to Source. Other European countries that have larger consulting industries include France, Spain, The Netherlands, Italy and Sweden.
Outlook impacted by political instability
For the coming year, the market is forecasted to face a change of fortunes. The crisis in Ukraine and political instability in Russia are expected to have repercussions on the local economy, and as a result spending on consultants by private and public sector organisations will fall, says B.J. Richards, Senior Analyst at Source. “The crisis in Ukraine has caused clients across much of the region to feel far more cautious and to scale back their plans. For Russian firms, the crisis also compounds stress around the devaluation of the rouble and the overall strength of the economy.”
In the report, the analysts also highlight that competition is likely to intensify in the Russian market. “Large firms can also expect to feel increasing pressure from small, niche competitors, which are becoming more prominent players in this market,” adds B.J. Richards.