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

04 October 2018 7 min. read

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 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.