Italian and Spanish consulting markets return to growth

04 August 2014

After years of decline the management consulting markets of Italy and Spain have returned to growth. Also the outlook for 2014 is positive, claims a new report from British consulting analyst firm Source.

Over the past years the consulting markets of Southern Europe have strongly been impacted by the financial crisis. During the height of the crisis years (2008 – 2010) the Italian and Spanish consulting markets contracted significantly, and even in its aftermath in 2011 the market contracted in size, with 6% in Italy and 3% in Spain. New data from Source reveals that despite the fact that both economies continue to struggle, the consulting industries have rebounded.

Italian consulting market
In 2013 the consulting market of Italy remained flat - growing by just 0.6% to approximately €1.05 billion. Financial Services remained the largest and fastest growing sector by some distance - up 2.9% to €296 million due to demand from regulation, modernisation, and digitisation projects. Healthcare was the next fastest growing market (2% to €29m), though it remains the smallest industry. From a service area perspective Financial Management & Risk and Technology where the largest and fastest growing services in the Italian consulting market – both growing by 2.2% in 2013. Regulatory work, cybersecurity, and bankruptcy-related services drove demand in financial management, while technology benefited from both traditional IT work and an interest in the cost-cutting potential of new digital tools.

Italian Consulting Market

Spanish consulting market
Following the 3% decline booked in 2012, the Spanish consulting market rebounded last year, growing by 0.8% to just over €1.1 billion. The Financial Services sector continues to dominate the Spanish market: consulting revenues in the sector grew by an impressive 3.9% in 2013 to €286 million, largely off the back of a regulatory offerings. Revenues also increased in the Energy and Resources sector, growing by 2.3% to €136 million, also mainly again due to regulatory work. The best performing service area was – similar to Italy – Financial Management & Risk, growing by 2.1% to €149 million. Technology, the largest service line in Spain, recorded growth of 1.6% to €521 million.

Spanish Consulting Market

According to the analysts the 2014 outlook for both markets is positive. The Spanish consulting market is forecasted to grow by 6%, 4% higher than the expectation for the Italian market. Nevertheless, the message for individual consulting firms is clear: competition in the marketplace will continue to intensify, and changes in business models will be required. In both markets the battle for consulting spend is fierce, eventually leading to a downwards pressure on prices and margins. This will accelerate three trends already visible in both markets: firms will be forced to take on unprofitable projects, further consolidation in the marketplace will take place and in the case of Spain, firms will increase their focus on other Spanish-speaking markets such as Central and South America.

Note that the market size estimates of Source differ from those of other analyst firms. For instance, Kennedy values the consulting market of Southern Europe at $12.2. billion, significantly more than the valuation from Source. The difference can for a large part be attributed to the definitions used. Source defines the consulting market as ‘management consulting services’ yet excludes areas such as tax advisory, audit, the implementation of IT systems, the delivery of outsourced/offshored services, HR compensation and benefits administration. In addition, the revenue estimates only take into account mid-sized and large-sized consulting firms (>50 consultants) and focuses on the work they execute for mid- and large-sized clients. See the section Market Segments for more information on market definitions.


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.