Finland's management consulting industry nears €2.5 billion mark

The Finnish management consulting market is projected by its local industry association to nearly crest €2.5 billion in 2018. The management consulting market has been growing at a steady clip of between 4% - 5% since rebounding from the global recession years.

Data sourced by Consultancy.eu from the Finnish Management Consultants Association (LJK) shows that Finland’s management consulting market is expected to continue growing at a strong rate this year. After seeing revenue growth of 5.0% in 2015, 4.3% in 2016, and 3.9% in 2017, Finland’s management consultancy sector is forecast to expand a further 4% in 2018, reaching €2.49 billion in revenues.

The robust growth rate of the Finnish management consulting industry outstripped even the healthy economic growth of the Nordic country, whose real GDP grew by 3% in 2017. Finland’s real GDP is expected to slow to 2.5% growth in 2018, while the management consulting industry is projected to maintain steady 4% growth.

Employment in the industry has seen consistent growth, reaching 4% growth in 2017 after growth of 8% in 2016 and 2015. The researchers estimate the Finnish management consultancy landscape to have about 13,000 employees, with consultants (‘fee-earners’) making up 80% of that figure, and staff accounting for 20%. LJK further reports that half of Finnish management consulting revenues is generated by large firms, with the remaining half shared about equally by small and medium-sized firms. Consultancies that have a strong presence in Finland include the regular global players, such as the Big Four, the US strategic consulting firms such as McKinsey, BCG and Bain, and local players, including Qvartz. A host of consulting firms serve the Finnish market with fly-in engagement teams through their offices in the Nordics.

In terms of service lines, Strategy, Operations, and People & Change accounted for most of the Finnish consulting market’s revenues, with 20% each and 60% altogether. Services in strategy consulting refer to activities that help organisations make plans for improving their business and outcomes. It also includes activities like company-wide transformations, restructuring, and strategic advisory in transactions (M&A and IPO, etc.).

Operations consulting concerns itself with business solutions including customer relationship management, cost reduction, procurement and supply chain, R&D, and business process re-engineering (BPR).

People & Change deals with the human element of an organisation, with offerings like HR strategy, change management, performance measurement, benefits, compensation and pensions, and training & coaching.

Meanwhile, Sales & Marketing services and Finance & Risk services each represented 10% of the industry. Sales & Marketing consulting involves the evaluation and redesign of related activities like branding and digital marketing, as well as product portfolio management, sales and channel management, and customer insight and relationship management. Finance & Risk Management involves the design of planning, budgeting, and performance models, and the optimisation of enterprise risks like credit, market, and operational risks. Consultants in this area also deal with regulatory and compliance management issues.

Technology consulting accounted for 10% of the Finnish market. Tech consultants help firms align their IT strategies with their business processes – implementing new technologies while addressing issues like cybersecurity. Interestingly, technology consultancy fee income in Finland is significantly lower than in other European countries, on the one hand attributable to a lower maturity in tech uptake by client organsiations, and on the other hand such differences could partly be explained by different methodologies used for market sizing. LJK’s assessment for instance excludes technology work such as system integration, a field other analyst firms typically include in their data.

An analysis by Source Global Research for instance sized Finland’s management consulting industry to be worth around €450 million, 5x smaller than the country’s industry association; however, the UK analysts did estimate the size of the digital segment to be higher.

Finland and the Nordics are particularly known for their strong digital consulting capabilities – an in-demand service internationally as firms seek to digitally transform their operations with productivity enhancing systems and emerging technology. Indian IT consulting giant Infosys recently purchased Fluido, a leading Finnish integrator of Saleforce CRM software.

Finally, the ‘Other’ service line, which combines all consulting services that do not fit in the six aforementioned buckets, accounted for 15% of the remaining consulting market. Activities in the category include complementary professional services like market studies, executive recruitment, and outplacement.

In terms of revenues from industries, the management consulting industry in Finland derived 21% of its revenues from the Consumer and Industrial segment, reaching $522 million in fees. In second place was Financial Services, accounting for 16% of revenues worth $398 million. Close behind in third was Telecom and Media with $373 million in revenues, accounting for 15% of the market. Then came Energy and Utilities at 13% worth $323 million, and the Public Sector at 10% of the market, bringing in $249 million in fees. All other segments accounted for 25% of the Finnish management consulting market, or $621 million in fees.

The management consulting industry in Finland remains very export-minded, with around 30% of revenues coming from outside the country. Two-thirds of ‘exported’ consulting from Finland went to EU countries, while one-third went to countries outside the EU.