Management consulting market of Nordics grows 6% to €2.8 billion

Growth in the Nordic consulting market accelerated through 2017, ramping up by 5.7% to reach a value of €2.77 billion according to the latest available data. All the countries in the region grew at a faster rate than in 2016, with the region’s largest market of Sweden seeing the strongest growth rate of all to hit a market size of €944 million.

The impressive performance of the Nordic economy, as well as the consulting industry of the region has seen a number of consultancies arrive in the area over the past year alone. Capco set up for business in Sweden, while Alvarez & Marsal continued to strengthen their own Stockholm locale. Elsewhere, Analysys Mason entered the Nordics through the acquisition of Nexia Management Consulting, while strategy firm EY-Parthenon (then Parthenon-EY) also recently expanded into the region with the purchase of Danish consultancy Box Associates, however it was not only one-way traffic.

Reflecting the growing confidence of consulting firms in the Nordics, Nordic-origin firm Qvartz – a rival to the traditional strategy consultancies – began a campaign of international expansion of its own via new partnerships that provided it with access to both the Dutch and Indian advisory markets.

The Nordics consist of four European nations; Sweden, Norway, Finland and Denmark. According to analysis of data gathered by Source Global Research, which examines the market for consultancies of a certain staff count and revenue size, all four nations have enjoyed strong growth. Of those nations, Sweden’s consulting market enjoyed the strongest performance, with 6.9% growth seeing it reach revenues of almost €1 billion. The Swedish consulting scene was worth €800 million in 2015, and now sits at €944million – over a third of overall Nordic consulting revenues.

Finland – the smallest market of the Scandinavian countries accounting for 16% of revenues – grew almost as strongly (6.8%). The growth rate in Denmark was markedly slower, with the market estimated to be around €740 million – a projected increase of just 4% – as was the case in Norway – which climbed 3% to €626million – however both industries still witnessed increased opportunities, and are in strong positions going forward.

Digital transformation

As is the case with the majority of mature consulting markets, the growth of the Nordics was driven by digital transformation – a $44 billion global consulting line – boosting growth across all service lines in 2017 as transformation programmes encouraged multi-disciplinary approaches to upgrading the business plans of clients. However, as a standalone service, it was undeniably digital transformation consulting which raked in the highest proportion of revenues.

Revenues from digital transformation work in the Nordics are fast approaching the €1 billion – more than a third of all Nordic consulting market revenues – thanks in part to the region being viewed as a global digital leader. Beyond this, technology was the largest area, riding on the back of the digital transformation wave. There was also a strong strategy component to this work, as the digitisation of the customer experience persisted as an area of high demand across the Nordics. On top of this, data & analytics became a fundamental part of many digitisation projects – a trend which has been replicated in consulting industries around the world as clients seek new ways to harvest and utilise their data to retain and win customers.

Sector

In line with nations such as Australia, the UK and Germany, digitisation was also a key theme for public sector consulting. This was driven by both central governments and regional legislatures focusing on delivering e-government initiatives, in order to cut costs and improve accessibility for citizens to key services, changing both the interface and also the back office processes supporting service delivery in the process.

As a result, the public sector is the Nordic region’s largest domestic revenue stream for consultants – consulting to the public sector represents around a quarter of the total market in the Nordics. Consulting fee income however grew fastest in healthcare – the region’s smallest sector – with clients coming under increasing pressure from an ageing population and funding pressures, in line with many health systems in Western Europe. In this setting in particular, organisations are being forced into streamlining services via technology.

The public sector is followed by the financial services sector – the second fastest growing sector. In this case, clients were looking for consulting support around compliance, dealing with new competition, and digitising their end-to-end operations.

Looking forward

One of the key issues the Nordic consulting market will have to face in the immediate future is talent. Again, as with the bulk of Western Europe, an ageing population means that a large portion of the skilled workforce is reaching retirement age, without the sufficient number of young workers to replace it. Combined with a booming independent and start-up scene, a talent crunch resulting from large firms scrapping it out for a diminishing pool of talent could limit growth.

Overall, however, consultants remain upbeat about the state of the market. A continuing upsurge in work relating to digital transformation, fuelled by the reputation of the Nordic nations as technological leaders, will likely continue to spread through every sector of the economy, meaning the Nordic consulting industry looks to be very well positioned to expand throughout 2018 – benefitting both larger multifaceted firms, and smaller, more agile challenger consultancies in the process