BrazilConsulting industry of Germany climbs 6% to €36 billion
Total revenues in Germany’s consulting industry grew by 5.7% to €35.7 billion last year, on the back of continued strong demand for digitisation, growth strategy and industry 4.0 services.
According to data from BDU, the association of consulting firms in Germany, the German consultancy industry booked its tenth consecutive year of growth, lifting its total industry value closer toward the forty billion euro barrier. In 2018, the German consultancy landscape was valued at €34 billion, and a decade ago it was well below the €20 billion mark.
IT security and cybersecurity was the fastest growing service area in 2019 (+7.2%), followed by marketing and sales (+7.0%) and sustainability (+6.6%). Strategy work, innovation and business model development were other areas of expertise that enjoyed above average growth.
Strongest growth in demand for external consultants came from clients in the professional and business services space (+6.8%), followed by those in the retail (+6.7%} and insurance (+6.5%) sectors. Germany’s traditional powerhouse industries – automotive and banking – both did increase their use of consulting firms, but growth trailed the market average by nearly one percentage point.
Using BDU’s data, Germany is Europe’s largest consulting market, however, other analysts estimate the UK consulting market to be larger. Who is to be believed depends on which definitions of consulting services are used and which part of the broader professional services market is addressed toward ‘management consulting’. Europe’s federation of management consultancies associations (FEACO) supports BDU’s claim – in its annual overview of industry statistics it presents the German market as the continent’s largest.
Source Global Research, an analyst firms that tracks market data across 40+ countries, uses standardised definitions across its data set, and estimates the German consulting market to around 5% smaller than that of the UK. The US is by a distance the world’s largest consulting market, accounting for over 40% of all revenues, with Australia, France and China rounding off the top six markets.
Outlook and Corona
In BDU’s survey, which was conducted before the outbreak of the Coronavirus in Europe, the outlook provided by leaders of Germany-based consulting firms was initially very positive. Despite the country’s mixed economic outlook, consultants started the year with a full bag of optimism, with the majority stating that they expected the consulting industry to grow (markedly) stronger than the economy.
The Coronavirus outbreak, which has paralysed most of the economy and injected a serious fear for a recession into public sentiment, has drastically changed the outlook. In a flash poll conducted last week to re-assess the market’s outlook under current conditions, BDU found that now 27% of German consulting leaders in fact fear a decline in sales.
Seven out of ten (72%) of consultancies said that they “for the moment” are sticking to their original sales forecast for the year 2020, and over 70% are still seeing little or no impact on their projects. Due to the Coronavirus guidelines put in place by the government, consultancies are serving their clients and working on project deliverables from home.
However, the BDU warns that in the rapidly changing landscape, change is the only constant and the picture could be very different in the space of just weeks, with further deterioration the most realistic scenario. Nevertheless, some consulting firms – in particular those active in strategy, supply chain management, restructuring and crisis management – may experience an uptick in demand.
