Irish consulting industry expands to €676 million, growth slows to 5%

23 October 2017 7 min. read
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The Irish consulting market, worth 676 million, has seen growth slow to under 5% in the last year. Ireland’s industry is advanced when it comes to its engagement with technology, however it is heavily dependent on domestic business, with just 11% of revenue arriving from overseas, making it vulnerable to national economic turbulence resulting from Brexit.

An analysis of data from FEACO, the European Federation of Management Consultancies Associations, and the Institute of Management Consultants and Advisers (IMCA), the professional institute for management consultants and business advisers in Ireland, shows that Ireland's consulting industry is growing, although its momentum has slowed last year.

The Irish consulting sector is projected to continue to expand in 2017. The industry had experienced an explosive bout of growth at 11% leading to 2015, which tapered off to 5% by 2016. The IMCA now projects a further-slowing, with an increase of between 4% to 5% for this year.

The Irish management consulting market (€ / million)

Both Irish exports and the business investment, which surged due to temporary impetus by multinational enterprises, will moderate but remain solid. Activity in the domestic sector will remain firm and employment will grow steadily – however the outlook is complicated by uncertainty surrounding ‘Brexit’. While the Republic of Ireland is entirely independent of the United Kingdom, and as such, will remain within the European Union, negotiations in Brussels have cast into doubt the nature of the Northern Irish border – which many have speculated will become a “hard” border for the first time. This, among other things, will likely have a significant impact on trade between the two nations.

Most independent assessments of Brexit’s implications also suggest an adverse outcome for the UK economy would have clear implications for the Irish economy, as Britain remains a large importer of Irish produce. Exports grew by 13.8% in 2014 and are projected to grow by 8.9% in 2016 and 7.9% in 2017, suggesting trade is already feeling the bite of Brexit. The close economic ties to the UK mean the slowdown in that respective consulting market’s growth will undoubtedly cause concern among Irish consultants and their clients.

According to the Management Consulting Association, the British equivalent of the IMCA, the UK consulting industry grew by just 4.76% in 2016, which is significantly closer to the trend of growth for the economy as a whole than many other mature consulting markets, where the industry is generally growing more rapidly than the national economies.

Ireland's consulting industry has however still managed to outpace the UK over the past two years, expanding 11% in 2015 to €644 million, and a further 5% last year to an estimated value of €676 million.

Ireland’s consulting industry – European benchmark

As consulting has historically been seen to both lag behind economic patterns and to anticipate new trends, with economic recession and growth both being outlined by growth patterns in consulting, a slowing consulting sector suggests firms are preparing for a fall in output by cutting expenditure on external expertise. Not only does this suggest Ireland’s consulting sector may see slower growth in the future then, but that the nation’s economy more generally may well be in line for sustained slowing in the near future.

As Ireland’s consulting sector is much more dependent on domestic trade than many similar economies, this could be exacerbated further. 89% of the sector’s revenue was sourced from clients on Irish soil, and while a portion of Ireland’s overseas revenue will have been sourced from UK clients, who as mentioned are likely to scale back on spending due to Brexit, that means the aforementioned economic turbulence may hit Irish consultants hard. 

The Irish consulting industry - by sector and service

Meanwhile, the Irish consulting market is also one of the most dependent on the public sector in Europe. Only Greece has a larger section of public sector revenue, at 37%, while a quarter of Ireland’s comes from government spending. Despite sustained criticism of the public expense caused by consulting, Ireland’s government have so far managed to maintain its spending levels on external advisors. Should Ireland’s economy enter into further difficulty, during which further austerity cuts were to occur, it is possible that the government will also have to re-evaluate its consulting bill, as a matter of political expedience. In terms of client industries, beyond the public sector, the Consumer & Industrial Products (22%) and Financial Services (21%) segments are largest spending clients in the Irish consulting industry.

An analysis of service line expenditures highlights the predominance of the Operations and Technology segments (30% and 23% respectively), followed by Strategy and People & Change at 17% and 11% respectively. Irish consulting’s technology service line is comparatively well developed, at 23% of the market share, and is in fact larger than respective segments in other consultancy economies, aside from the UK, on 28%. Ireland regularly appears at the head of industry leader lists when it comes to the FinTech and cybersecurity industries, with the consulting sector investing heavily in the region as a result of the technical prowess.

The Irish consulting industry - benchmark by service

Ireland’s expansive Operations service line suggests a large demand for business transformation. 30% of the consulting industry’s clients required these services, which is more in line with the demand of the German economy (40%) than that of the UK (11%). People and Change consulting were the least in-demand services associated with Irish consulting, meanwhile, suggesting technological solutions are broadly being preferred in terms of business transformation, rather than Human Resourcing changes – as businesses look to automation and technology in order to cut costs related to wages, and talent shortages – which have exacerbated these costs across European economies.