Growth of Swedish and Finnish consultancies slowed in 2023

04 April 2024 3 min. read

Following a bumper year, growth and profitability in the Swedish and Finnish consulting industry slowed last year, although the majority of players still managed to end the year in the positive.

Market research from Cinode – a provider of technology solutions to the consulting industry – has found that listed consultancies in Sweden and Finland faced a mixed bag of opportunities and challenges in twelve months of 2023.

The year kicked off on a high, with average growth in the first quarter surpassing 17%, and average margins hovering above the 8% mark, a relatively solid number for firms operating with a people-driven business model.

Growth of Swedish and Finnish consultancies slowed in 2023

Statistics 2023 full year growth. Source: Cinode

Yet over the course of the next three quarters, the slowdown in the economy started taking its toll. Geopolitical unrest, supply chain disruption, a less stressful labour market, and lower investment appetite due to high interest rates all led to a tighter wallet from corporates on discretionary spending. As a result, demand for consulting services took a hit.

According to Cinode’s analysis, by the fourth quarter, average growth had fallen to roughly 3%. “And much of that growth was fuelled by higher consultant rates which are typically factored in during the fourth quarter of the year, meaning that real growth was lower,” said Mattias Loxi, co-founder of Cinode.

The developments differed by industry, however, with the data showing that clients in the real estate, e-commerce, telecom, and public sectors all markedly pushed back (or cancelled) projects. Clients in the energy, automotive, life sciences, and defence sectors meanwhile to a far lesser extent scaled back on their external consulting spend, amid major disruption and regulation in their industries.

Growth of Swedish and Finnish consultancies slowed in 2023

Statistics 2023 full year (ebit%). Source: Cinode

With chargeability down and pressure on fees, two thirds of the consulting firms assessed ended 2023 with lower operating margins than the year previous.

“Many consulting companies that were impacted by the economic downturn were quick to implement cost savings and reduce their expenses,” said Loxi. This included cutting back on expenses such as travel and amenities, with two thirds of firms opting to downsize their headcount.

“Similar to what we saw in previous years, the performance of consulting firms was highly differentiated, with top performers outpacing laggards by a notable multiple.” Excellence in commercials and operations is a key driver of this gap, with Loxi stating that “those that master their internal efficiency are understandably more capable of supercharging their growth and profitability.”

Growth of Swedish and Finnish consultancies slowed in 2023

High variation among the companies. Source: Cinode

For its analysis, Cinode gathered the key financials of listed consulting groups. The analysis excludes the performance of privately-held consultancies, which represent the largest part of the market.

Research from IBIS World suggests that Sweden’s consulting market is worth just under €12 billion per year, making it Europe’s fifth largest consulting market. Finland sits around 13th place, behind Denmark and Austria, among others.