Boston Consulting Group looks to build on great year in Germany

Boston Consulting Group has enjoyed a fine year of growth in Germany, adding roughly €100 million to its annual revenue haul of €830 million in 2017. As the firm bids to kick on from the encouraging results, 2018 sees BCG plan to hire 500 new employees, including about 370 consultants.

Although the consulting firm has not published exact figures for the German market for four years, estimates extrapolated from the firm’s most recent filings submitted to the French Chamber of Commerce show annual sales in Germany can be estimated at just under €830 million, rising from €730 million in the year previous. With this expansion, BCG Germany has become the growth engine of the firm’s global footprint.

Globally, sales increased by 11% in 2017, from $5.6 billion to around $6.3 billion. As a result, the management consultancy has now seen double-digit growth for four consecutive years – a far cry from the annual growth of “one digit percentage” anticipated by BCG Germany & Austria Managing Partner Carsten Kratz in 2014 – something reflected by a huge boost to the firm’s global headcount. The organisation saw its collective staff boom from 14,000 to 16,000 over the course of 2017, and while the US – the world’s largest individual consulting market – understandably remains Boston-headquartered BCG’s largest market, it is closely followed by its European powerhouses in Germany and the UK.Commenting to the German press (Handelsblatt) on the firm’s enhanced stature in the key European market, Carsten Kratz said, "We have clearly exceeded our goal,” after the news broke that BCG Germany had hired more than a quarter of the firm’s new employees last year. 500 new employees arrived at the MBB firm, including roughly 370 consultants, bolstering BCG’s offices in seven locations spread across Germany, with bases in Berlin, München, Stuttgart, Köln, Hamburg, Düsseldorf and Frankfurt.

This year, the consulting firm plans to pick up where it left off, hiring on the same scale. In the consulting industry, however, it is traditional for firms to experience a high turnover of staff, with the intensity of work leading to workforce attrition, and competition for talent meaning consultants are commonly lured elsewhere, sometimes within a few years of arriving in a new role. As a result, about half of this hiring is likely to be necessary to occupy existing jobs, and the other half is likely to be real growth.

Digital growth

The rapid ascent of the business in Germany has been built on the back of heightened demand for digitalisation. The global digital transformation market is currently worth $44 billion, having almost doubled in size over the past 18 months. According to the most recent figures available, revenues of the consulting service line have increased by more than $20 billion since 2016, as clients routinely tap consulting firms to assist with overhauls of their business plans to best utilise innovative new technologies, and fight off growing competition.

BCG has already played a strong hand in this field, having launched BCG Platinion – its subsidiary dedicated to helping clients with digitising and transforming their IT function, providing digital design and engineering capabilities – in Germany, before expanding it to boast a worldwide presence of its own, with offices in Europe, the US and Canada. Beyond this, however, Kratz sees great opportunities for German industry in the data economy – which BCG will hope to further tap into as a catalyst for its next stage of growth.Kratz said; "German companies are particularly well positioned when it comes to machine data," before elaborating that he believes the use of machine data is just beginning. "Half of all existing data was created only last year. Not even 1% of all existing data has been evaluated yet. If we succeed in setting up data-driven business models for mechanical engineering, German industry has a great future."

Besides digital, BCG has high hopes for another new business line set to be launched in Germany. BCG aims to achieve this by expanding its existing range of services, something complemented by the arrival of its American subsidiary, Brighthouse, to Berlin. The consulting firm, acquired three years ago by BCG, specialises in helping companies find meaning, or in German; "Purpose Beratung." According to Kratz, it is increasingly vital to help employees and managers of a company to understand, “Why does our company exist?”

While the deceptively simple question was answered by many companies relatively easily for generations, Kratz however maintains that "in the wake of digitisation, the answer is often suddenly no longer trivial." Studies have shown that companies which can clearly answer the question are more efficient, posting better results.