Five-year high in business confidence helps drive work for French consultants


• French consulting market grows three times faster than economy

• Fastest growth recorded for consulting market since the onset of the global financial crisis in 2008

• AI and robotics starts to play a role in regulatory reporting.

The French consulting market performed strongly in 2016, up 4.2 per cent to €4.3billion, meaning it grew three times faster than French GDP. This is the fastest growth rate since the onset of the global financial crisis in 2008.

Growth was fuelled by a buoyant financial services sector, which outperformed the wider market, increasing 7.1 per cent to €1.3billion. This sector is now almost double the size of any other market for French consultants. Regulation, cost pressures, digital, and innovation all had their part to play in 2016’s strong growth.

The report from the leading research and strategy firm for the global management consulting industry, Source Global Research, says that financial institutions are particularly turning to consultants to help ease the regulatory burden and lower the cost of compliance, and for the first time, consulting firms are deploying digital and robotic technologies to make reporting more efficient - an evolution set to continue throughout 2017.

Frédéric Solvet, Partner, PwC, added:

“Financial services is booming. Despite our firm auditing many of the large banks in France, we still saw an impressive growth rate in this sector.”

Alongside financial services, retail (up 6.2 per cent to €342million) and pharma & biotech (up 5.7 per cent to €55million) both had transformation as a common theme—and digital technologies were typically at the heart of this work. Clients in these sectors ramped up their focus on innovation and customer-centricity, leading to a plethora of opportunities for consulting firms. In particular, French retailers have woken up to the threat posed by digital natives such as Amazon, and the retail market started to take the changes needed much more seriously.

Domenico Azzarello, Managing Director, Bain & Company, added:

“Retail exploded this year. We saw double digit growth. It's not only because of the strength of the local market— France leads in terms of competency within the industry in Europe.”

Digital change keeps technology and strategy consultants busy
Work around digital change is continuing to keep lots of technology and strategy consultants busy. The market for technology consultants grew 4.7 per cent to €1.45billion whilst strategy work grew 4.4 per cent to €728million. The reports says that as clients look to digital to provide agility and the ability to ensure speed of delivery, there’s a growing willingness to embrace things like AI and robotics as part of the solution.

Anne Bioulac, Senior Partner, Roland Berger, added:

“AI is becoming quite the buzzword as clients are looking to take advantage of all the best new technologies and include them in their global market strategy.”

Risk was hot in 2016

The Source report also reveals that the market for risk & regulatory work expanded rapidly in 2016 – up 6.2 per cent to €593million - as clients in many industries felt swamped by compliance.

Rachel Duk from Source Global Research added:
“A more exciting area of opportunity in risk work is cybersecurity. This is a service growing so quickly that the market is struggling to keep pace with relentless client demand. Following a rising number of cyber-attacks, the issue has been a priority for the French government, who announced a new national cybersecurity strategy at the end of 2015.”

Thirst for international expansion favours larger consulting firms

The report also found that a thirst for international expansion continued to intensify, as clients sought an escape from the uninspiring domestic economy. Overall, these ambitions favoured larger consulting firms that could leverage their own global footprint to advise clients on market entry with authority. For instance, work for Type A firms, largely made up of the Big Four firms, grew 5.4 per cent to €1.1billion. The report says that audit rotation was a mixed blessing for these firms. For some it curbed activity and restricted their growth in particular sectors, but for others new opportunities opened up as audit contracts ended.

B.J. Richards from Source concluded:

“2017 is set to see continued high levels of interest as even more clients come to embrace what digitisation has to offer. Furthermore, as we’ve observed in markets that are further ahead in their digital journeys, this initial wave of work can be expected to quickly lead to further investments as clients are impressed with early results and look to move deeper into digital transformation and adopt even more advanced technologies.”