French management consulting market grows 3.6% to 4.1 billion

03 May 2016

Large French consulting firms have seen their performance improve over the past 12 months, growing their combined revenues by 3.6%, marking their best year of growth since the start of the global financial crisis. The French management consulting industry is now valued at €4.1 billion, up from €4.0 billion last year.

Between 2009 and 2012 revenues in the French consulting industry contracted year on year, lowering fee income to between €3.8 and €3.9 billion in 2013, according to data from analyst firm Source Global Research (Source). Since, France’s advisory landscape has returned to growth. In 2014 the market grew by 2.4%, and latest data reveals that French consulting firms have been able to accelerate their momentum in 2015, hitting a growth rate of 3.6%. As it stands, the French consulting market is worth €4.1 billion, which sees the nation hold a 3.4% share of the global consulting industry.

Much of the industry’s growth can be attributed to the financial services sector, which makes up more than a quarter of the entire French consulting market and grew by 6.4% to €1.2 billion in 2015. Regulation was a big driver of demand, but the real game-changer was that many organisations embarked upon far-reaching transformation, requiring the support of armies of consultants. “We have seen a lot of major transformation programmes starting up. They had gone off the radar as a result of the financial crisis and are now starting to reappear”, comments Bernard Desprez, Managing Director at Kurt Salmon.

The analysts found that several other industries also had a good year. Consulting to the Manufacturing (€694 million), Healthcare (€122 million), and Retail (€322 million) industries all grew more than 5%. The Public Sector, however, struggled, registering just 0.1% growth to €374 million. “After years of cost cutting and redundancies, many French organisations began to invest in projects that required consultants”, says Alison Huntington, an analyst at Source.

Although the market grew overall, French management consulting firms faced mixed fortunes. Firms with a pure domestic focus found generating higher revenues more challenging than their international oriented counterparts. “Domestic demand did pick up somewhat during the year, but consulting to multinational clients on internationally-focused projects is where the growth and excitement are happening”, reflects Huntington. Firms that are able to match clients’ international footprint while also providing a broad range of skills, such as the larger strategy consultancies, the Big Four and functional specialists, have performed well financially, while particularly mid-sized firms have found it harder to get in on the action. Huntington: “Generally, the larger global firms and those with in-demand specialisms are bullish, while those in the middle talk of hoping for a stable market.”

The fortunes of these mid-sized firms – many considered too big to be specialist but not big enough to compete with global firms – are according to Source a major talking point in the French advisory landscape. A large share are in the process of reassessing their strategies and positioning to keep afloat, while others have agreed to merge with industry peers to bolster their scale. Data from Equiteq reveals that the French consulting industry saw 116 major deals (deals with a value of $20+ million) last year – a third of the number of deals in the UK but twice the volume noted in Germany – of which nearly 80% of deals involved a pure domestic transaction. In comparison, more than 40% of acquisitions of consultancies in the Netherlands and the Nordics are completed by ‘foreign’ players. Examples of recent deals in the French landscape include PwC’s purchase of SMG Group (50 consultants), Solucom’s pick up of Kurt Salmon (excluding Kurt Salmon’s retail and consumer goods units) and the merger between Trexia Consulting and 7M Consulting. 

Yet, some mid-sized French consulting firms consciously shun the above strategies and prefer to opt for a defensive strategy, states Didier Taupin, Managing Partner Consulting at Deloitte. “Lots of mid-sized firms are trying to protect themselves by refusing to grow, refusing to take any risks, and even downsizing.” In other words, they may see the sharks circling but simply don’t want to merge, preferring to adopt a survivalist strategy in the hope that the approach will see them through the dark days, building on the hope that the better times will come sooner than later. 

Risk, regulation and cyber security work in demand
From a functional perspective, risk and regulatory services were the fastest growing consulting service line in 2015 (up 5.9%), driven by a surge of interest in risk and cybersecurity, as well as increasing regulatory burdens on many industries. Technology, the largest consulting service in France – estimated to hold one third of the market – also grew a healthy 4%, driven by demand for services around new technology and existing core systems. Operations management accounts for just over 20% of France’s consulting industry, while strategy consulting – arguably the most prestigious segment – accounts for just over 15% of the market. A recent study by and ESCP-ACE found that, when it comes to prestige, the US ‘big guns’ in the industry, McKinsey, BCG and Bain (known as ‘MBB)’, lead the pack, followed by German consultancy Roland Berger (led globally by Frenchman Charles-Edouard Bouée) and Oliver Wyman (led in France by the Lebanese Hanna Moukanas).

Looking forward, the outlook for 2016 and beyond is across the board positive, yet mixed across segment, industry or firm type. On the bright side, economic recovery is forecasted to further spark growing demand. Digital is earmarked as a key growth area, although, France lags other mature consulting markets such as the US (a $50 billion industry) and UK (a £6.4 billion industry) in this respect. “It seems that the digital revolution still hasn’t delivered a windfall for consultants in France. Clients are still mostly talking about what to do rather than actually kicking off projects.” Firms, however, seem confident that talk must turn into action soon, and are ramping up their digital operations in order to be ready to capitalise when the train starts rolling. “We are now at the stage where our discussions with clients about digital and transformation have reached a point of maturity where they are ready to launch projects”, acknowledges Nicolas Richard, Consulting Head at KPMG France. 

In the public sector growth is likely to stagnate. With presidential elections scheduled for 2017, many clients are putting off decisions about major programmes until the results are in, “so very little growth in the use of consulting is expected during 2016”, says Huntington. And further, consultants acknowledge that the consulting market in France is still fragile. “There’s a worry that the mild economic recovery is built on shaky foundations - that it wouldn’t take much to shatter consumer confidence - and that the bigger, structural issues within the French economy haven’t been addressed and are unlikely to be fixed any time soon”, concludes the analyst.


Accenture's push into the creative sector is an identity crisis

18 April 2019

In its latest push into the creative sector, Accenture Interactive acquired New York and London-based ad agency Droga5 earlier this month, adding illustrious clients such as HBO, Amazon and The New York Times to its roster of clients. With the latest in a long line of similar purchases, Accenture Interactive further demonstrated its ambition of becoming the globe’s leading trusted advisor to chief marketing officers. Yet according to Ben Langdon, Chairman of Class35, Accenture’s strategy may be heading in the wrong direction.

A press release on Accenture’s website announcing the acquisition sits next to a quote stating that “brands aren’t built through advertising” – a huge contradiction from a consultancy firm hell-bent on becoming the ‘CMO agency of choice’. It’s not alone of course. The entire consulting industry wants a piece of the creative pie right now. In addition to Accenture Interactive, recent acquisitions by PwC Digital, IBM iX, and Deloitte Digital meant that in 2017, for the first time ever, four of the world’s ten largest creative agencies were consultancies.

So just what it is that Accenture wants to achieve from this? For one thing, it’s clearly trying to be a digital transformation business. A one-stop creative shop rivalling more traditional models, it wants to lure CMOs in with the promise of lower ad spend and a “more impactful customer experience”. At the same time, though, it’s still in thrall to those same slinky, shiny branding and advertising agencies it’s attempting to disrupt. The Droga5 acquisition and that of Karmarama a few years before are both testament to this.

There’s a fundamental problem with this, though. Digital transformation businesses don’t sell to CMOs. These people have enough on their plates trying to transform their own marketing skills in order to keep up with an ever-changing market – they just don’t have the time or the energy to concern themselves with digitally transforming a whole business. If Accenture’s purpose is digital transformation, then going after creative agencies is barking up the wrong tree.Is Accenture's push into the creative sector an identity crisis?

Worlds apart

Perhaps more importantly, these two industries are worlds apart in terms of the way they think. Creative agencies are all about ideas, campaigns and consumers. Digital businesses, on the other hand, are customer-driven – they think in terms such as lifetime value, measurement, and efficiency. Customer-led thinking is an entirely different beast to consumer-led thinking.

The reality is that the arrival of digital and an all-encompassing obsession with technology, measurement and social has led to the death of agencies in a reductive, zero-sum, efficiency-focused battle with brands. Indeed, agencies have become so obsessed with the latest tech fads, they’re beginning to forget how brands work. Worse still, they’re beginning to forget how brands are built. And, by forgetting, they’re destroying their own values.

Killing creativity

All things considered, it really feels to me as though Accenture is a chip leader in a game it doesn’t understand. Expensive acquisitions like these show that they’ve got the big money, but they don’t appear to have any idea what they’re doing with it. Take talent, for example. The best talent in the creative industry right now is out in the market; it’s not tied to any one agency. Both agencies might well be at the top of their game, but why would a consulting firm waste so much money on buying them when they could hire high-quality creative talent on a contingent basis instead?

As their presence in the top 10 creative agencies shows, there is a growing trend in which Accenture, like many of the other big players, are buying up agencies as if they were nothing more than keywords. What they’re really buying, though, is a collection of credentials, clients and IP. Unfortunately, the talent that created those credentials aren’t going to stay at the business, the clients that hired the agency in the first place won’t be interested in buying what is basically just another part of Accenture, and the IP never really existed to begin with.

Droga5, for example, was one of the few agencies that did great brand work the old-fashioned way – undoubtedly something that made it attractive to Accenture in the first place. The irony, though, is that by leading it further away from the way of working that made it so special, the consulting giant will kill its creativity.

“Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record…. But, in flashing its cash, it is spending millions on acquiring nothing of any value.”

If pressed, the recently acquired agency staff at Accenture will tell you just how dysfunctional the new arrangement is. They’re largely unfulfilled. Rarely do they feel their work has any sort of meaning or purpose. What’s more, the different disciplines have found little or no common ground, and find it hard to work together as a cohesive whole. It’s not surprising, then, to see talented people leaving in droves.

Beyond the window dressing 

It’s clear, then, that consulting firms and creative agencies are no easy bedfellows. But in his company’s defence, Accenture Interactive’s Senior Managing Director for North America, Glen Hartman, described its culture as being “far, far away from what a stereotypical consulting firm would look like. Our office and studios look a lot like Droga5’s.”

In demonstrating a belief that office design equates to workplace culture, this statement serves as an illustration of how confused Accenture is right now. It wants to justify its new strategy so badly, it’s started dressing like a creative agency. But if you look beyond the window dressing and see that you and your partners are speaking a different language with a different purpose, selling to different people in a different market, there’s no getting away from the fact that you’re different.

Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record, and it wants to dazzle others with its new direction. But, in flashing its cash, it is spending millions on acquiring nothing of any value.

Related: Space between consulting firms and creative agencies is converging.