France management consulting market reaches €4.5 billion as growth peaks

24 May 2018 8 min. read

The management consulting market in France is witnessing the fastest growth in over ten years, according to new data. Having grown by more than 6% last year, consultancy revenues in France are on track to reach €5 billion per annum in the next few years.

Data sourced from the report ‘The France Consulting Market in 2018’ by analyst firm Source shows that the French management consulting industry grew 6.2% in 2017, posting revenues of around €4.5 billion. The analysts focus on what is known as ‘big consulting,’ excluding data from firms with fewer than 50 staff, as well as consulting engagements under a certain value.*

Risk and regulatory work was the fastest growing service line last year, growing 8.4% to hit revenues of €657 million. Regulatory compliance remained a reliable source of consulting work, while growing digitisation brought risk-related cybersecurity work into higher demand too. Technology was the second-fastest growing service line, also due to the digitisation work many clients are undertaking. While not yet generating huge revenues, data & analytics work value increased – with clients starting to probe how to collect and properly utilise the data they generate.

There was growth in every industry segment in 2017. The largest consulting segment in France – financial services (which also globally is the largest client for consultants) – had the third-highest growth rate, with transformation programmes and a heavy regulatory burden (a legacy of the 2008 crisis) continuing to feed demand. Globally, the financial services segment is worth about $36 billion, representing almost 30% of global consulting revenues.

Market size of France’s management consulting industry

New technology is ‘hot’ in consulting, as it is in other industries, with Robotic Process Automation (RPA) at the forefront of consultants’ digital workload. Clients are looking for ways to streamline their processes and cut costs in the back office, and RPA’s ability to automate routine and repetitive tasks is an attractive prospect. Demonstrating this trend, consulting revenues grew most in retail (up 9.7% to €375 million), as market incumbents tried to catch up with the tech advantage of e-commerce companies – who continue to disrupt brick-and-mortar business models.

Large consultancies like the Big Four saw the fastest growth, as their wide service line allowed them to benefit from strong regulatory demand, while their huge investments into technology services let them capitalise on fast growing digitalisation demand. Strategy consulting firms such as McKinsey, BCG and Bain, and technology firms, such as Accenture, Atos, Capgemini and IBM, also experienced healthy growth levels. Furthermore, across all firms types, partnership remains a trend in France’s consulting market, as big firms realise there are advantages to partnering up in order to provide more services to clients, rather than trying to ‘go it alone.’

Mergers and acquisitions, however, were still a popular option for French consultancy expansion. Two of France’s largest consulting and tech firms – Atos and Capgemini – acquired new operations, with Atos purchasing three US healthcare consultancies, and Capgemini buying digital design firm Lyons. Meanwhile, engineering consultancy giant Altran acquired Italian logistics consultancy NEXT Ingegneria dei Sistemi, as well as UK-based Information Risk Management (IRM). Paris headquartered Sia Partners expanded in the Middle East with the acquisition of ShiftIN Partners, while fellow French firm Wavestone more recently added Xceed Group to its IT consulting division in the UK.

Meanwhile, 2018 has already seen a number of notable deals in the French consulting market: KPMG France boosted its consulting practice with the purchase of Carewan and Mapp, and Argon Consulting, an operations and supply chain consultancy, merged with British firm Crimson & Co.

Upwards and onwards

As in the wider global consulting market, digitalisation was the dominant trend in France’s consulting market, with clients investing heavily into digital initiatives. In 2016, digitalisation was tagged by industry experts as a key growth area – as at the time, although France’s consulting market was entering heavy growth, digital services lagged behind other mature markets.

The French management consulting industry

France’s consulting market is also experiencing rapid growth due to the increased internationalisation of its consultancies. With UK consulting firms facing an uncertain future on the continent due to Brexit constraining the ease of trans-Europe business activities, French consultancies stand to reap the benefits of British isolationism – pushing into new markets and working more with multinational clients on international projects. French consultancies also have linguistic advantages in French-speaking countries like Morocco, Algeria, Lebanon, and other countries bearing the legacy of French colonialism.

Consulting growth is also said to have benefitted from boosted business confidence in the aftermath of President Macron’s election in mid-2017, defeating potentially destabilising opponents on the far-right and far-left. Macron’s ‘business-friendly’ policies in regard to regulatory burden and employment rights have, according to the analysts, aided some of the consulting market growth. In a similar fashion, the election of Prime Minister Modi in India and his subsequent privatisation initiatives and regulatory reduction helped stimulate the Indian consulting market (as well as the wider economy).

“The election of President Macron in May and his party’s success in parliamentary elections in June boosted client confidence, resulting in increased spending and stronger consulting demand in the second half of the year,” said B.J. Richards from Source Global Research. “Pent-up demand was released as clients began taking up long-delayed initiatives and had a new-found willingness to pursue big projects.”

As such, consultancies in France are positive about this year’s prospects. Consultants expect the buoyant markets of the latter half of 2017 to continue as clients continue to focus on digitalisation and growth amid a relatively stable political and economic environment.

Related: The top 20 strategy consulting firms to work for in France.

*The French association for management consulting firms – Consult’in France – has higher estimates of management consultancy revenues. The association estimates that revenue growth reached 8.5% in 2016, with the total consulting market reaching €5.9 billion. Consult’in France used the financial records of leading firms to arrive at its estimate, while using data from members and non-members of the industry association.