Management consulting industry of France accelerates to €4.5 billion

24 May 2018

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.

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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.