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

26 September 2018 Authored by Consultancy.eu

The management consulting industry of Italy is projected to grow at a rate of 7.2% this year to a market size of €4.3 billion. The Eurozone’s third largest economy has returned to a period of stable, albeit mild growth in the past year and is expected to continue on its growth path. The management consulting industry is following suit, and after a downturn between 2008 - 2013 has recorded growth for the fifth year in a row.

Italy rocked European markets with the election of the anti-establishment Giuseppe Conte from the Five Star Movement. The incoming Prime Minister promised to remove and reduce the austerity measures put in place during years after the crisis and vowed to introduce a basic universal income whilst reducing taxes.

This combination worried investors who see the only path to reach these goals as lumping on additional debt to Italy’s already excessive pile. According to a recent McKinsey Global Institute report, Italy’s government debt is 151% of the EU nation’s current GDP. This represents the third highest level of government debt globally behind that of Japan and Greece. 

Whilst the election also caused geopolitical tensions, neither seemed to have an effect on the high level of growth in the country’s management consulting industry. According to Consultancy.eu analysis based on data sourced from the Italian association for management consulting firms and the European Federation of Management Consultancies Associations, the sector is growing at 7.2% year-on-year.

Size of the Italian consulting market

Employing upwards of 40,000 people throughout the industry – up 5.7% on last year – Italy’s management consulting industry is one of the largest professional services employers and yet also one of the most fragmented. Whilst the industry is dominated by micro-sized consulting firms – 85% of firms employ less than 3 people – the growing presence and size of larger consulting firms is driving management consulting employment and the industry’s growth as a whole. To exaggerate this divided market share, a handful of the industry’s 35 larger firms hold roughly half of the entire Italian marketplace. That leaves over 20,000 small to medium sized consultancies vying for the other half of total revenue.  

All of the regular suspects are active in the country including the Big Four and US strategy consulting firms McKinsey & CompanyThe Boston Consulting Group (BCG) and Bain & Company, led by the recently appointed Roberto Prioreschi. In terms of the local market, Bonfiglioli Consulting is a consultancy that enjoys a strong presence in the economically vibrant Northern Italian cities of Bologna, Padau and Milan, while Value Partners, founded in Milan in 1993, is one of Italy’s most prestigious home grown consultancies. The strategy & operations specialist has offices in Milan, London, Rio de Janeiro, Buenos Aires, Hong Kong and Shanghai.

Italy’s consulting industry – service lines

In their analysis, the researchers break down the management consulting market into seven major service area segments: strategy, operations, sales & marketing, fi­nance & risk management, people & change, technology and other services. Finance and Risk represents the greatest market share sitting at 25% overall, the highest out of any of the European markets in question and double the European average. The role of Italy’s banking sector is one reason for the high share – many of Italy’s financially buckled banking institutions have brought in top consultants to help them restructure and redesign for the future, while across the landscape banks are relying on external advisors and technology firms to help them embrace digital within their operations. 

Services in the area of Strategy account for 21% of the total. Offerings in this service line include corporate and business unit strategy, company-wide transformations, restructuring, and strategic advisory in transactions (M&A and IPO, etc). The combination of Technology (17%) and Operations (13%) together represent a further 30% of the marketplace. In comparison to the European average, Italy’s Technology service line still has room to grow, indicating that there is no slowdown in sight. Further, while Italian enterprises and government institutions have been a bit slower to pick up digital compared to their counterparts in the more Western countries, the demand for digital is forecast to boom in the coming years.

With a market share of 7%, the People & Change segments and Sales & Marketing segments are the smallest within Italy’s management consultancy sector. In comparison, France’s People & Change service line is worth more than the entire Italian management consulting marketplace – valued at $4.5 billion. 

From the perspective of the consulting industry, this highlights significant opportunities to leverage Italy’s positive image and Italy’s famous working conditions. Italians have a priority of work-life balance affirmed by 55% of respondents to a Randstad survey. The Italian lifestyle has long been associated with a good working and home-life balance, a recipe which if undertaken correctly produces happiness in the workplace, a fulfilling career and enough down-time to enjoy hard work. This combination is also a well sought after concept within the consulting industry – which in recent years has begun implementing flexi-working initiatives to combat traditionally long hours, especially in strategy consultancy and merges & acquisitions.

Consulting industry of Italy – sector sizes (2018)

Considering where the money comes from, Consumer and Industry dominate the Italian playing field, representing over a third of total client spending on consultants. The high level of this base comes from the defined Italian manufacturing sector – one of the nations largest economic outputs – driven by international demand for high-end Italian goods. Financial Services is also one of the major contributors to management consulting growth across the board.

The effect of Industry 4.0 technologies such as automation and FinTech has already cascaded into the Italian marketplace. This is evident by looking behind the numbers and to the root cause of the consulting spend. The research suggests that both the Manufacturing and Financial Services sectors have been impacted by the global drive towards digitalisation.

Over 75% of consulting firms – including all of the big names – are heavily involved in projects which support clients in their adoption of new digital technologies, including mobile technologies, big data and a growing prevalence of e-commerce and artificial intelligence. Only a few years ago, at the beginning of the upturn in the Italian management consulting market after the crash, that number was half what it is today.

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

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