Consulting market of Slovenia grows 4%, industry worth €280 million

The management consulting market of Slovenia will this year grow to an estimated market size of €280 million, according to new data. 

The Republic of Slovenia, a former state of what used to be Yugoslavia, is a country of 2.1 million inhabitants, who combined generate an economic output of $56.9 billion (GDP). The country, bordered by Italy, Austria, Hungary and Croatia, has seen its economy accelerate in recent years, with growth up from 2.3% in 2015 to 3.1% and 5.0% in 2016 and 2017 respectively. The country is benefiting from an improved economic climate throughout Europe, as well as from its admittance to the European Union in January last year. According to the World Bank, Slovenia’s main competitive edges include an educated workforce and a well-developed infrastructure, while the country enjoys the logistical benefits of being situated at a major transport crossroad. 

In the economy’s slipstream, Slovenia’s management consulting industry has seen its fortunes improve in recent years. Following a challenging period between 2008 and 2014, which saw the industry contract, in 2015 the market returned to growth as local organisations started increasing their spending on external consultants. After recording growth of 2.1% in 2015, Slovenia’s consultancy landscape has enjoyed 4.7% and 4.5% growth in the past two years, and is set to perform similarly in the current year.According to data from AMCOS – the association of management consulting firms in Slovenia – Operations (32%) and Strategy (25%) are the largest services line in the country. Strategy consultants help clients with designing and setting up corporate wide, business unit or functional strategies, while in the public sector space they support government-owned institutions with public and economic policy. They also support clients with business planning, business modelling, market analysis and mergers & acquisitions. 

Operations consulting is at the heart of most consulting industries globally. In Germany for instance the segment holds a 40% share of the total, mainly on the back of Germany’s large industrial footprint in automotive, manufacturing and chemicals. Key offerings in operational consulting include process optimisation, business process re-engineering, procurement, supply chain logistics, lean and agile ways of working and customer/supplier relations management. 

Technology consulting is currently the third largest service area for consultants in Slovenia, although the field is in light of the digital boom globally and across Europe touted for rapid growth. The market for digital transformation consulting is now worth $44 billion according to a UK-based analyst firm, up from $22 billion the year previous, and executives in Slovenia’s consulting industry forecast spending in the areas of digitalisation, automation and emerging technologies to rapidly grow in 2018 and beyond. The service lines Sales & Marketing (11%), Finance & Risk (8%) and People & Change (9%) are less substantial in the Slovenian consultancy space.

Consulting spend by industry

From an industry perspective, consumer & industry is the largest segment, spending roughly twice as much on external consultants than banks, insurance companies and other financial services institutions. Companies in the energy & utilities landscape spend around €42 million on consulting firms, while the public sector spends around €34 million. Fees in the latter industry are under pressure however, as government institutions and municipalities still commonly use the lowest price approach as a prevailing criterion to award tenders contracts.

Much of the growth realised by Slovenian consulting firms is achieved outside of Slovenia. In 2016 the share of revenue generated beyond the country’s border was 31%, and according to AMCOS’ estimates this number now hovers around the 35% mark. This however does not mean that one third of all consulting work by Slovenian consultants is completed outside of Slovenia – fees are generally lower in the country, meaning that the average revenue per consultant is lower for domestic projects as opposed to international projects. Due to the growing market, combined with the adoption of the euro, consulting fees in Slovenia are expected to have risen this year.Slovenia’s management consulting industry is relatively fragmented: around 80% of the companies classify as small consultancies. Largest players in the market are, not surprisingly, the local organisations of global groups such as Deloitte, EY, KPMG, PwC, Capgemini and Accenture. Many larger consulting firms serve the Slovenian market with fly-in teams from neighbouring countries, mainly Italy and Croatia. 

Outlook

Looking ahead, the researchers at Slovenia’s association of management consulting firms expect the market to continue its growth path. The level of growth is highly dependent on four factors: overall economic growth; the development of infrastructure projects; how digital transformation spending evolves and to what extent Slovenia is granted large EU-funded programmes. 

With a share of 40%, the region's most populous country Poland is Eastern Europe’s largest management consulting market, followed by Romania and the Czech Republic. The region as a whole is expected to book growth of around 7% this year. 

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