Management consulting industry of France accelerates to €4.5 billion

24 May 2018 7 min. read
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The French management consulting market is experiencing its fastest growth in more than ten years, according to a new report. Having jumped by more than 6% in 2017, revenues of France’s consultancies are well on the way to hitting €5 billion per annum in the next few years.

The French consulting sector has continued to enjoy a strong performance over the past three years particularly. In 2017, Consult'in France, the French association for management consulting firms, France’s equivalent of the British consulting sector’s representative body – the MCA – suggested that growth had hit 8.5% in 2016, taking the market to a total value of €5.9 billion.

Now, data sourced from ‘The France Consulting Market in 2018’ by Source Global Research has suggested similar findings, albeit via a different methodology. While Consult’in France looked at the financial records of leading management consulting firms to compile its data – gathering statistics from both members as well as non-members – Source typically focuses on what is known as ‘big consulting’. This excludes data from firms with under 50 members of staff, and engagements under a certain value in their studies – meaning their headline figures of 6.2% growth and a revenue totalling €4.55 billion might appear smaller, but it is not inclusive of many firms factored into other analyses.

Either way, the bottom line highlighted is that France’s management consulting industry is experiencing its fastest growth for over a decade. There are a multitude of factors behind this meteoric rise.

Size of the French management consulting industry

Industry and Function

Risk and regulatory work was the fastest growing service line in 2017, expanding 8.4% to hit revenues of €657 million, as regulation remained a reliable source of consulting work and the growing prominence of digitisation brought cybersecurity work into higher demand too. Technology was the second fastest growing service line, thanks to the importance of technology in the digitisation work clients are undertaking. While not yet generating huge revenues, consultants also saw a rise in the amount of data & analytics work as clients looked to understand what can be done with data and how to do it.

Consulting growth was recorded across every sector in 2017. France’s largest consulting market – financial services – saw the third-fastest growth rate, while on-going transformation programmes and a heavy regulatory burden – a legacy of the 2008 financial crisis – continued to drive demand. In comparison, the financial services consulting industry is globally worth over $36 billion, and now represents almost 30% of the world’s consulting revenues.

As with the majority of industries, new technology is a hot topic in financial services, with Robotic Process Automation (RPA) at the forefront of consultants’ digital work load. Clients, both in and outside financial services, looked for opportunities to streamline processes and cut costs in the back office – driving growing revenues. Demonstrating this trend, consulting revenues were boosted most rapidly in retail sector (up 9.7% to €375 million), as traditional market incumbents moved to cancel out the technological advantage of agile e-commerce competitors, which continued to disrupt brick-and-mortar business models.

Large firms such as the Big Four saw the fastest growth, as these multifaceted groups could benefit from both strong regulatory demand and their substantial investments in technology services and end-to-end delivery capabilities, while strategy and technology firms also experienced healthy levels of growth. Partnership likewise remains a big trend in the France consulting market’s competitive landscape. Even the biggest firms are realising they can’t do it all, and the creation of ecosystems and partnerships with a range of providers have enabled firms to provide a greater breadth of services to their clients.

The management consulting industry of France

This does not mean that there was no deal activity between firms looking to expand their operations and offerings with purchases, however. Two of the largest consulting and tech firm from France, Atos and Capgemini attached new bolt-on acquisitions, with Atos buying three healthcare consultancies in the US, and Capgemini completing the purchase of digital design firm Lyons. Altran, another major French origin player, also bolstered its capacity with the acquisition of Italian logistics consultancy NEXT Ingegneria dei Sistemi, and Information Risk Management (IRM), a UK-based company specialising in risk identification. Sia Partners, meanwhile, leveraged recently acquired firms to launch its own startup incubator and investment wing in 2017, in the hopes of tapping new markets.

Continuing this trend, 2018 has already seen a number of notable deals involving French consultancies. Wavestone, which last year broke the €350 million revenue mark, recently acquired Xceed Group to its IT consulting wing. Elsewhere KPMG France boosted its consulting capacity with the purchase of firms Carewan and Mapp, and Argon Consulting merged with UK firm Crimson & Co.

Moving forward

As with the global consulting market, digitisation was the prevalent trend in the consulting market in France, with clients making big investments in far-reaching digital initiatives. In 2016, digitalisation was earmarked among industry experts as a key growth area, as while France’s consulting market was beginning to boom, at the time it lagged behind other mature consulting markets on the matter.

Elsewhere, another factor contributing to France’s rapid growth is the increasing internationalisation of French consulting. As UK consultants face an uncertain future in terms of international and particularly EU business – with Brexit potentially constraining the ease with which the industry can currently cross borders – French consulting seems to be capitalising on this, pushing itself forward into new markets, and working with multinational clients on internationally-focused projects. Similarly to the UK with its colonial legacy in the commonwealth, meanwhile, France is also capable of building on growing consulting markets in Francophone regions, such as Morocco, Algeria, Lebanon, and many more. The operations of many firms in these regions are often managed from Paris.

One other factor not to be discounted is the election of pro-market President Macron in mid-2017. His defeat of the fascistic Front National and the far-left Jean-Luc Antoine Pierre Mélenchon in the polls boosted business confidence, thanks to his promises to shred regulations and employment rights, something which aided the French consulting market to expand rapidly. A similar trend was seen in India after the election of hard-line nationalist Prime Minister Modi in India – whose campaign of privatisation and the reduction of regulations stimulated business and consulting in the Asian economy.

Commenting on the matter, B.J. Richards, Senior Editor from Source Global Research said, “The election of President Macron in May and his party’s success in parliamentary elections in June boosted client confidence, resulting in increased spending and stronger consulting demand in the second half of the year. Pent-up demand was released as clients began taking up long-delayed initiatives and had a new-found willingness to pursue big projects.”

As a result of this, consultants are understandably positive about their prospects for 2018. The Source report concludes that consultants in France are upbeat about their prospects, as they expect the more buoyant market they enjoyed in the latter half of 2017 will continue throughout this year as clients continue to focus on digitisation and growth.