Consulting markets of Bulgaria and Romania valued at $5.3 billion

10 October 2017 Consultancy.uk

The combined value of Bulgaria and Romania’s consulting markets presently stands at around $5.3 billion. However, there is a significant gulf in market maturity between the two countries. The entire Romanian consulting market is set to approach a size of $4.5 billion by 2020, according to the latest available data. The outlook is less optimistic for the stuttering growth of neighbouring Bulgaria, however, which is projected to see its consulting market grow to just $1.17 billion in the same period.

Building on data sourced from Statista*, Consultancy.uk analysis has found that the Romanian consulting market will likely have grown by around half a billion dollars between 2015 and 2020. The Romanian consulting market, which includes the region’s second largest management consulting space, will continue steady growth throughout the next three years, with a bumper year anticipated from 2017-2018, when expansion is expected to hit 4%. While Bulgarian consultants may see a 5% boost to growth between 2018-2019, the fellow constituents of the Eastern European consulting industry can only expect to see a total expansion between 2015 and 2020 of an estimated $101 million.

While the combined size of both markets will therefore hit a worth of $5.3 billion, Bulgaria’s total consulting market will remain around a fourth of the size of Romania’s. This is due to a larger professional services industry in Romania, and varying stages of technological development between the two. While the size of the technology consulting segment in Bulgaria is proportionally slightly larger than Romania’s, the draw of revenue in the sector remains far lower. In 2016, technology consulting drew just $246 million in Bulgaria, compared to the much stronger $953 million of Romania.Bulgaria consulting industry

Subsequently, Bulgaria lags behind a global trend, which has seen the most developed consulting markets – such as the US, UK, Australia – become decreasingly reliant upon tax advisory for income. While it is worth noting that analysis of those markets tends to focus on management consulting, and this data factors in the whole industry, a similar pattern still emerges. Although tax advisory remains a significant part of their businesses, those countries have seen growth in demand for digital consulting boost their technology and business consulting segments, as is the case in Romania. Romania’s business consulting segment is now worth over $2.5 billion, with Statista’s figures suggesting it will reach more than $2.7 billion by 2020.

Romania’s dominant business consulting segment is best explained in the same way as growth in technology consulting; the increasing demand for digital features to be integrated into the business models of clients. Again, as part of a global trend, which has seen digital transformation consulting become a $23 billion industry in its own right, companies are looking to invest more and more in the implementation of digital technologies. These include automation and AI solutions, which have increasingly been seen as a viable method of decreasing labour costs due to improving equipment and falling costs, and growing profit margins. That Romania also has a more developed professional services sector further plays into this, with the nation’s larger array of firms similarly keen to leverage new business-enhancing practices, further boosting Romania’s consulting market as a whole.

Romania consulting industry

Currently Romania controls 5% of the global offshore software development market and is the third leading software exporter, behind India and China. As of 2010, there were 7.8 million connections to the Internet, out of which 4 million were broadband, in a nation of 20.25 million people at the time. According to the Akamai report in 2011, Romanian cities Constana, Iasi and Timisoara were in the top 100 cities at the world level with the highest average Internet speeds, while Romania ranked in the top 5 internet speeds in the world as of 2013, averaging at 37 Mbit/s download, surpassing regional rivals Bulgaria, Lithuania and Latvia as well as the United States, which ranked 14th.

Bulgaria’s population size is also understandably a factor in their consulting industry’s size, proportionally. With only 7.1 million people residing in the country, Bulgaria has significantly less room for domestic growth, while an ageing population means this is shrinking further – the population having stood at 7.3 million in 2010. Romania’s population may have likewise decreased, now standing at 19.7 million, but the significant levels of professional services and technology market maturity mean the consulting market there can better appeal to overseas demand too. While both economies will most likely continue to see some manner of growth until 2020, Romanian consulting firms can probably expect a consistently higher level of expanding demand, with 2017-2018 being an exemplary year, as Bulgaria are projected a near 0% stagnation, compared to 4% increases in their neighbouring market.

* Note that the market sizing and scoping definitions of Statista are broader than that of other analyst firms, such as for instance ALM, Gartner or Source, which explains the higher market sizing estimates. See the page 'Consulting Market' for details

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