Norway’s consulting market set to cross €1 billion threshold

04 October 2018 Consultancy.eu

The Norwegian management consulting market is expected to cross the €1 billion mark this year according to data from the country’s association for consultancy firms.

Data sourced by Consultancy.eu from Norway’s consulting industry association Consulting Norge shows that Norway’s management consulting market is expected to grow in a best case scenario to €1.024 billion in 2018, an increase of about 10.8% from last year. The double digit growth rate would far outstrip Norway’s projected real GDP growth rate of 2.13% for 2018. Norway’s management consulting industry managed to sustain strong growth rates of around 5% in 2016 and 2017 – excellent results given the downturn in the oil sector from which Norway derives so much of its wealth.

The downturn in the oil industry caused many consulting firms to focus on other sectors, with financial services remaining a solid client industry for many management consultancies. However, with oil prices rebounding, firms can look to make greater fees from oil and gas companies looking for productivity boosts through digital transformation.

Size of the Norwegian consulting market

Headcount employed by the large, mid-sized and small consultancy firms in Norway stands at about 4,900 according to the data, of which 90% are professionals (or fee-earners) while 10% are staff.

Service areas

In terms of service lines, Strategy is the largest segment in Norway’s consulting market, at 31% of the total. 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.).

The next largest segment is People & Change, at 26%. The service line deals with the human element of an organisation, with offerings like HR strategy, change management, performance measurement, benefits, compensation and pensions, and training & coaching.

Operations consulting is the third largest service line in Norway’s consulting market, at 19%. Operations consulting concerns itself with business solutions in the areas of customer relationship management, cost reduction, procurement and supply chain, R&D, and business process re-engineering (BPR).

Technology consulting comes in fourth, accounting for 15% of the market. Tech consultants help firms align their IT strategies with their business processes – implementing new technologies while addressing issues like cybersecurity. However, in Consulting Norge figures, some large segments of technology consultancy, including systems integration, are not included, and as a result the share of digital consulting is lower compared to estimates by other analysts who apply a broader definition to consulting work in the field.

Norway’s consulting industry – service lines

The authors expect the technology service line to continue growing in the future as clients seek out support for digital transformation projects and business model innovation work that improves productivity and cuts costs. Oil and gas giant Statoil’s recently hired Capgemini to help the energy company digitalise, minimising costs and maximising the profits from the value of oil in the event of another price crunch. The city of Oslo, meanwhile, hired Danish consultancy COWI to develop a model to determine the implications of autonomous mobility in the country’s capital – something which will ultimately move transport away from fossil fuel dependent combustion engines.

Next up is Finance & Risk, which accounts for an estimated 7% of the Norwegian management consulting market. 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.

Lastly, Sales & Marketing consulting activities makes up 2% of the Norwegian market. 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.

Consulting industry of Norway – sector sizes (2018)

In terms of client sectors, the Public Sector is the Norwegian management consulting industry’s largest source of revenues. Government and public sector agencies account for roughly 27% of the total market, driven by the government’s focus on modernising and simplifying its services and activities. Fees from the sector are expected to reach $276 million in 2018.

The next largest industry client for the management consultants is financial services, accounting for 22% of the market. The segment is expected to reach $225 million in revenues this year. Consumer & Industrial Products (including Retail) comes in third, accounting for 18% of the market and projected earnings of $184 million. Energy and Utilities, still recovering from oil price shocks, account for 12% of consulting revenues ($123 million).

Telecom & Media is projected to account for 5% of the market in 2018, worth $51 million in fees. All remaining industry clients are projected to bring in $164 million in consulting revenues, accounting for the remaining 16% of the market.

Consulting Norge reports that although the Norwegian management consulting industry is predominantly focused on the domestic market, an increasing number of firms are restructuring towards a Nordic model, capitalising on the similar cultures and business practices of neighbouring Scandinavian countries. The shift is being driven by the largest and most global consulting firms, like the Big Four (EY, Deloitte, KPMG, PwC) and the Big three US-origin strategy consultancies (McKinsey, BCG, and Bain). Also, consultancies entering Scandinavia tend to open one hub to serve the region. Financial services consultancy Axxsys Consulting for instance recently picked Copenhagen as the base for its Nordics office, while Alvarez & Marsal last year setup shop in Sweden’s capital city Stockholm for the same purpose.

According to an estimate by a UK-based analyst firm, Norway’s consulting industry accounts for just over 20% of the Nordic consulting industry.

80% of clients satisfied with management consulting services

25 February 2019 Consultancy.eu

According to research among private and public sector consultancy buyers in the UK, 8 out of 10 clients are satisfied with the work carried out by management consultants. 84% of the clients polled by the British association of management consulting firms said that they use consulting services when they are in need of strategic, transformation or change support. 

The study found that 81% of the respondents believed that the delivery of consultancy services had met or exceeded their expectations. Additionally, more than half of respondents said that consulting work provided had consistently exceeded or substantially exceeded their expectations. At the other end of the spectrum, less than 9% felt that money spent on management consultants was not worth the investment.

Based on the results, UK’s consulting association – operating as the Management Consultancies Association (MCA), the counterpart of the BDU in Germany or Consult'in France in France – concludes that across the board, the quality of management consultancy services in the country has grown in the past years. Main reasons for the professionalisation include growing competition spurring the need for maturity, technology-led innovation which bolsters service propositions and quality assurance and more scrutiny from clients on who they hire and for what. 

However, critics of the study accuse the industrial representative body of bias, drawing an analogy with a butcher who is inspecting the quality of his own meat. The MCA however rebuffed the accusations of bias, pointing out that the survey was conducted by an external research agency, ensuring an impartial methodology and set of results.Do consulting projects add value to clients“We’re encouraged by the feedback from business leaders about the value of consulting,” said Tamzen Isacsson, CEO of the MCA. While the study didn’t look into the hard return on investment of consulting spend, the UK association did conduct such a study a few years ago, finding that clients were getting a return of £6 for every £1 invested. In the recent report, 16% of respondents listed value for money as an aspect of engaging consultants they especially appreciated, however, non-monetary aims were more important for consultancy buyers. Top reasons cited as to why management consultants were hired include independent thinking and transformational outcomes (49% each), and knowledge transfer and achievement of project goals (35% each). 

When asked for which services they typically hire consultants, business transformation came on top by some distance. This is mainly due to the changing environment in which organisations operate, with aspects such as heightened competition, tech-led disruption, a changing workforce and more demanding consumers leading the need for change. In order to adapt to these and other forces, organisations need to revamp their business strategies and operating models, meaning that larger business transformation efforts are required to remain successful.

Not surprisingly, digital and technology ranked second, with nearly all companies nowadays looking into how emerging technologies can benefit their business. In manufacturing, Industry 4.0 holds major promise for operational improvement, in aviation, the internet of things will be crucial for smoother maintenance & operations, while in automotive, robotisation is becoming key to streamline production lines. Technology also can massively benefit the public sector, including areas such as communication with inhabitants and entrepreneurs, as well as internal processes.Which consulting services are used most by organisationsFunctional areas of management consulting that remain in high demand are strategy, finance, project management and change management. 

Looking ahead into 2019, efficiency is the top businesses challenge clients will seek to hire consultants for, at 47% of responses. Not surprisingly, Brexit ranks high – the UK and EU still are working on ways to settle Brexit by the end of March, and in its slipstream the impact on businesses and governments. Digital implementation and crafting strategies to deal with digital disruption round off the list of top priorities. 

For more information on the study, see the article ‘8 out of 10 UK companies hire consultants, and are satisfied’ on Consultancy.uk. 

Related: Italy's management consulting market grows 7% to €4.3 billion.