Switzerland's growing consulting industry approaches €2 billion mark

24 September 2018 Authored by Consultancy.eu

The Swiss management consulting market has reached the CHF 2 billion (€1.8 billion) threshold for the first time in 2017, according to the latest available figures. The Swiss consultancy industry is set for further growth this year, and will likely next year break through the €2 billion mark.

Data sourced from ASCO – the Swiss association for management consulting firms – shows that the Swiss consulting market is enjoying rapid expansion on all fronts. Following a succession of bullish years for the sector, the Swiss consulting market has managed to double in the space of 15 years. To illustrate the extent of its expansion, Switzerland's advisory landscape has seen growth more than twice as high as gross domestic product (GDP) growth of the whole of Switzerland in the same period.

While the landlocked Alpine nation has always maintained an impartial relationship with the EU, and is not a member of the union, its geographical situation means that some 80% of consulting turnover is sourced from clients in the EU, while only 20% comes from outside the block of 28 nations. Accounting for around 11% of the DACH region’s consulting market, Switzerland's larger management consulting firms employ roughly 6,400 employees, consisting of 90% professionals and 10% staff. These are spread across over 600 consulting firms, of which large firms maintain a steady dominance of the Swiss market.

Size of the Swiss management consulting market

The largest 20 firms in Switzerland control, and have controlled over three quarters of the market share for some time now. Despite the meteoric rise of the market as a whole, smaller and mid-sized firms have done little to challenge this in recent years, remaining at 13% and 14% of the market respectively in 2016 and 2015, despite there being many more of these types of firms.

The group of the top earners in the market – consultancies that generate revenues of over 31 million CHF – include Synpulse, PwC, Q-Perior, Oliver Wyman, McKinsey & Company, KPMG Advisory, IBM Global Business Services, Infosys, EY, Deloitte Consulting, The Boston Consulting Group, BearingPoint, Bain & Company, A.T. Kearney and Accenture. These are then followed by firms bringing in between 10 and 31 million CHF – these include ZEB, Simon-Kucher & Partners, Roland Berger, Novo Business Consultants, Horváth & Partners, Helbling Business Advisors, Detecon, Cognizant, Capgemini Invent, BDO, AWK Group, App Unternehmensberatung and AlixPartners.

Market size

With the market volume of the Swiss consulting industry having seen fee revenues amount to around CHF 2 billion in 2017, growing by 5.6% on 2016’s CHF 1.9 billion, the market has now doubled since 2002. In that time, the Swiss consulting scene has averaged annual growth of 4.7%, despite having seemingly plateaued in 2012. Since then, the nation’s consulting scene exploded into double-digit growth, leaving the consulting industry’s growth well in excess of Switzerland’s Gross domestic product (GDP) growth since 2002 – which in comparison only grew by an average of 2.4%.

For 2018, according to a survey among management consultants by ASCO, consulting firms expect on average an industry growth of 6.7%, while they estimate their own growth to average 9.7%. Comparatively, this is higher than the predictions seen in 2016, of 9.1%. Over the next five years (2018-2023) meanwhile, they expect to see an average annual basis growth of 5.2%, up from 2016’s forecast of 4.1%. While the outlook seems to bode well for the management consulting sector of Switzerland, there are however some fronts in which it is presented with potential barriers to growth.

Switzerland’s consulting industry – market concentration

According to the survey, the economic benefit of consulting in Switzerland should be far more visible to clients and high-impact external groups, such as politicians and government officials. Consultants are concerned that reputation damage of the industry could place a drag on consulting expenditures, as for instance is currently seen in Australia, where the media and public outcry is inciting the government to scrutinise and in some cases even tighten its spending on consultants.

Further, Switzerland's consulting sector is increasingly struggling to meet its recruitment demands, which will further impact its capacity to impact clients. With the majority of Western economies now facing an ageing population, filling roles has become more difficult. At the same time, the growth of smaller market players mean there is a boom of potential roles which are vying for a shrinking talent pool. As a result, in Switzerland, the 40 largest consulting companies were unable to complete their planned new hires in 2017, while the trend of recent years, that graduates are increasingly plumping for smaller consulting companies and boutiques, continues. The talent challenge comes despite the fact that the position of management consultant is the 3rd highest earning job in Switzerland, according to the Swiss Federal Statistics Office.

Finally, digitisation presents a major hurdle for Swiss consulting. No firm can afford to pass by digitisation, with digital transformation consulting now making up a $44 billion global industry, according to Source Global Research, and set to grow further. As such, digital is the main trend in the Swiss market, and is challenging a number of established team structures in the industry, along with other major issues firms will have to overcome to get the most from the trend.

Remarking on the trend, Arnd Niehausmeier, President of ASCO, said; “Comprehensive management consulting without ‘new knowledge’ (digital know-how and IT skills) is dying out. Skills and capabilities in the digital realm are key for consultancies in today’s ever digitising world.” Marcel Nickler, a Board Member at BearingPoint, adds, “The digitisation of the consulting business brings an acceleration, complexity and unpredictability, which no longer works with established team structures.” Bjørnar Jensen, Managing Partner of Deloitte Consulting in Switzerland, remarked that in digital, “consultants are increasingly assuming the role of the facilitator, ensuring that within companies technology-led innovation is coordinated and deployed successfully.”

Consulting industry of Switzerland – sector sizes (2017)

Service lines

The service lines of the management consulting market of Switzerland are predictably dominated by finance related tasks. As one of the world’s foremost banking hubs, as well as wealth management havens, consulting revenues related to financial services work constitute €652 million, or 35% of the market. Consumer & Industry consulting makes up €447 million, or 24%, while the other largest single sectors of Public Sector, Energy & Utilities and Telecoms & Media make up a combined 17%.

In terms of the actual services provided, Swiss consulting broadly caters to seven major segments: strategy, operations, sales & marketing, finance & risk management, people & change, technology and other services. This is led by strategy consulting, making up 29% of consulting services. These activities support organisations in analysing and redefi­ning their strategies, improving their business operations and optimising their corporate and business planning, business modelling, market analysis and strategy development, as well as the governance of major organisation redesigns, including company-wide transformation/ restructuring programmes and strategic advisory in major ­financial transactions.

Strategy also increasingly relates to technological demands placed upon a consulting firm, as companies look to integrate new, innovative techniques with their broader businesses. These activities support organisations in evaluating their IT strategies with the objective of aligning technology with business processes. These services include strategic support for decisions related to the planning and implementation of new technologies for business applications, including security and data centre architecture.

For all the latest news and research on the Swiss consulting industry, see the page ‘The consulting industry of Switzerland'.

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