Consulting industry of Nordics | Scandinavia expands to €2.8 billion

29 May 2018 6 min. read

The Nordic consulting market grew strongly in 2017, reaching a market value of €2.77 billion on the back of a healthy 5.7% growth rate. The consulting market growth rate of every Nordic country has accelerated compared to two years previous, with Sweden posting both the fastest growth rate and the highest revenues.

The Nordics are made up of four Northern European nations: Sweden, Norway, Finland and Denmark*. Sweden is about twice as populated as the other three Nordic countries – which each have around 5 million inhabitants.

According to data from Source Global Research – which studies the market for consultancies above a certain staff count and revenue size – all four nations have experienced robust consulting market growth.

Size of the Nordic management consulting industry

Within the Nordics, Sweden’s consulting market has put in the strongest performance, posting 6.9% growth and reaching revenues of almost €1 billion. The Swedish consulting market grew from €800 million in 2015 to reach €944 million in 2017 – accounting for over a third of the Nordic market.

The smallest Nordic consulting market is Finland, making up 16% of the region’s revenues. However, Finland’s consulting revenues in 2017 grew almost as strongly as neighbouring Sweden, with a growth rate just 0.1% shy of Sweden’s region-leading rate. The growth rate was slower in Denmark – posting around 4% to reach €740 million in revenues – while Norway’s consulting market grew by 3% to €626 million.

However, despite the slightly slower growth rates, Denmark and Norway’s consulting markets nonetheless witnessed increased opportunities, and are in strong positions going forward. Indeed, if looking at the consulting market from a per-capita or population-linked view, Denmark has the strongest-performing consulting market in the Nordics.

Like other mature consulting markets, growth in the Nordic consulting industry was fuelled by digital transformation – a service line valued at $44 billion globally. Digitalisation drove growth across all service lines in 2017, as transformation programmes now demand multi-disciplinary approaches when revamping clients’ business plans and processes. As a standalone service, digital transformation consulting accounted for the highest proportion of revenues.

Digital transformation revenues in the Nordics are almost €1 billion now – more than a third of the region’s consulting market. This is for a large part driven by the fact that the Nordics are viewed as global digital leaders. As such, technology consulting was the largest area, riding the digital transformation wave. There was also an important strategy element to the tech/digital consulting work, while data & analytics was a further core part of many digitalisation projects – as clients seek to harness the power of data to gain and retain customers.

Digitalisation was also a major touchpoint for public sector consulting. This was driven by Nordic central and regional governments striving to deliver e-government initiatives – cutting costs and improving accessibility to government services. The switch to e-services entails changing both the interface as well as the back office processes that support service delivery.

The public sector is the Nordic consulting industry’s largest revenue source, accounting for about a quarter of the total market. Fee incomes, however, grew fastest in the healthcare industry – the smallest-sized consulting area in the Nordics – with clients facing funding pressures and an ageing population, similar to other Western European health systems. In this setting, clients are trying to cut costs and streamline by way of improved technological integration.The consulting industry of the NordicsThe second largest and second fastest growing consulting area is financial services. Clients from the financial services industry were looking for advisory support in compliance, hedging off new competition, and digitalising their operations.

One important issue facing the Nordic consulting market is that of a future talent gap. As a large portion of the skilled workforce reaches retirement age, there is an insufficient number of young workers to replace them. Combined with the booming startup scene, a talent crunch from large firms battling over a diminished talent pool could limit growth.

Nonetheless, consultants remain confident about the state of the market. An upsurge in digital transformation work, fuelled by the Nordic region’s position of technological leadership, means that the consulting industry will likely continue expanding through 2018. The benefits will flow to both larger, full-service firms, as well as smaller boutique firms – especially those with digital offerings.

Nordic appeal

The strong performance of the Nordic consulting industry, as well as that of the wider regional economy, has attracted a number of firms to the region in the past year. Management and technology consultancy Capco set up shop in Stockholm, while Analysys Mason entered the Nordics with the acquisition of Nexia Management Consulting. Meanwhile, strategy firm EY-Parthenon recently moved into the region with the acquisition of Danish consultancy BOX Associates.

Nordic firms also moved abroad, capitalising on the strong reputation of the region’s consultancies. Demark-based Qvartz – a mid-sized challenger to large, traditional strategy firms – embarked on an international expansion campaign with new partnerships that opened access to the Dutch and Indian consulting markets.

* Technically, Iceland is also a part of the Nordics, but the country is excluded from this consulting market analysis.