French advisory market returns to growth, now 4 billion

23 June 2015 8 min. read

Following years of contraction and lacklustre growth, the French consulting market has returned to a healthy growth level. In 2014 the management consulting market in France grew by 2.4% - its best performance since the start of the global financial crisis – to more than €4 billion. For 2015 the industry is expected to continue its upwards trajectory, although the growth rate is unlikely to increase further.

The French consulting market has been through a number of challenging years. In 2012 revenues contracted by 2.5%, shrinking the industry to around €3.7 billion, according to data from analyst firm Source Information Services (Source). A year later a timid growth of 0.8% was realised, succeeded by 2.4% last year, which although thin compared with the 9% growth booked in the US, the year does represent the best year French consultants have seen since the financial crisis. The French advisory market is currently valued at over €4 billion say the analysts, adding however that a change in definitions and baseline figures for 2013 data has made comparisons with previous years no longer possible*. With its current turnover, the consulting market of France equates to roughly 4% of the global consulting market, and approximately half the size of the UK consulting market.

Size of the French Consulting Market

Financial management and risk, which grew at 4.3% to €626 million – expanded at almost twice the market growth rate thanks to steady demand for regulation work and a major upswing in risk and cybersecurity consulting. According to Francois Marchessaux, Partner at Colombus Consulting, the cyber security consulting market is growing by 10%. Technology, the largest service in France, managed modest growth of 2.4% to over €1.3 billion and this was systematic of all service sectors apart from financial management and risk.

François Dalens, General Manager of the Boston Consulting Group in France, strongly recognises the growing importance of technology in engagements, stating: “We are supporting several customers with uncovering big disruptive solutions in operational matters.” With technology adoption on the rise so too is the need for implementation services and change management, says Nicolas Bartel, partner at Eurogroup Consulting, stating: “Change management work within IT teams is picking up.” Sales of HR consultants jumped 3.4%, spurred mainly by a wave of large reorganisations and downsizing transitions, currently on the agenda of for instance Areva, Air France, PSA Peugeot Citroën and SNCF.

French Consulting Market - Functional Area

From a sector industry the majority of the sectors experienced some growth in 2014, but energy and resources, financial services, and pharma and biotech grew especially well. Financial services, France’s largest sector grew 3.3% to €1.2 billion. Eric Mouchous, Lead Advisory Partner for France, Luxembourg and Maghreb at EY, comments: “Financial services performed very well in 2014, helped by the regulatory environment. There were lots of projects linked to that. But there was also a lot being driven by the digital wave – a lot of digital transformation projects.”

Energy and resources, the fourth largest sector in the market grew the fastest, expanding by 4.5% in 2014 to €474 million due to a combination of regulation, new technology, and the need for cost cutting which means many clients in this sector are undertaking transformation projects.

Leadership in French Consulting Market

Much of the growth in the market in 2014 came from multinational clients - benefiting big consulting firms rather than smaller specialists, says Source. “Starved of growth opportunities in France, clients are looking overseas to improve their fortunes, and often want a consulting firm with a global reach to match”, claim the authors. Eric Labaye, partner with McKinsey & Company and chairman of the McKinsey Global Institute (MGI) – last year recognised as the 2nd best think tank of the globe – adds that the changing focus of the globe’s “center of gravity towards the East and the South" is also reshaping the nature of consulting demand, at least in the top end of the industry.

Large international firms with a strong presence in the French market include among others the Big Four, Accenture, Oliver Wyman, BearingPoint and the strategy consultancies McKinsey, BCG, Bain and Roland Berger, which is led by Frenchman Charles-Edouard Bouée. French-origin firms with the largest footprint include Altran, Atos, Sia Partners, Solucom (recently acquired Hudson & Yorke) and Solving Efeso, with Argon Consulting, InovenAltenor and Vertone a few of the well-known boutiques that operate from Paris, the country’s capital city.

Companies in French Consulting Market

Similar to other advisory landscapes, the French management consulting market finds itself in a state of flux, triggered by among others new technologies disrupting business models and changing client behaviour. As a result, consultancies are revamping their go-to-market approach, centred around the question how to address the polarisation of the consulting market, and whether one firm can offer both commoditised and high end services. “Firms are also making changes to their business models to improve their appeal in the market: some firms are developing assets to meet particular client needs, others are developing tools to deepen the insight they can deliver to clients”, comments Alison Huntington, Senior Analyst at Source. Yet not all consulting firms find themselves well positioned to capitalise on opportunities offered by the changing landscape. Eric Falque, President of BearingPoint in France, says that despite the clear signs of disruption looming around the corner “several established companies are still wondering where the competition is coming from and how they should prepare.”

Outlook for 2015
For 2015 the outlook remains mixed, says Source. While some firm will continue to do very well, others will struggle in what is still a tough market. Against the backdrop of a lacklustre French economy, the researchers forecasts that growth is unlikely to increase further in 2015. “Despite consultants being reasonably optimistic about the prospects for the French consulting market in the next 18 months, while macro-economic factors remain as challenging as they are it’s hard to see the rate of growth increasing further for the time being. But interest in digital transformation should keep the market heading in the right direction to some degree”, concludes Huntington.

* According to Source, the revision made reflect improvements to the research model. Key changes incorporated include an increase in the size of the retail consulting market, and a decrease in the size of the pharma and healthcare markets. In addition, some firms have been reassigned to different segments, as a result of which the size of the HR consulting market has been reduced.

Quotes from François Dalens, Nicolas Bartel, Eric Falque and Eric Labaye courtesy of Les Echos (Des consultants, pour quoi faire?). Quotes from Eric Mouchous, Francois Marchessaux and Alison Huntington originate from the Source report.