The consulting market in France 2022
56.3 billion euros in turnover in 2021 for the digital market. 33.6 billion for the IT consulting and services market (in 2020) despite a 4.2% drop in growth. But who are they? What are they doing? And, how are they meeting their challenges today?
1 - The consulting market in 2021/2022
Who are they?
Consultancy firms or consultancies bring together consultants with a variety of skills and expertise within their respective fields. They provide services to companies that seek to improve various aspects of performance from external professionals.
Consulting is a term used to describe the work that different consultants do for their clients. These missions evolve with the needs of companies and market trends, the acceleration of digitalization, and the restrictions linked to the recent COVID-19 crisis.
Clients invest in the consultants' ability to bring something extra to their business, something effective that will help them achieve their goals.
Consulting is paving the way for the creation of new professions in the next decade. How are consultants participating in this evolution and in the transformation of companies, particularly for strategy and IT consulting?
Read also : What is the role of a consultant, and the different types of consulting jobs?
How has strategy consulting grown since the crisis?
Many companies nowadays use consultancies for their digital services. The consultants perform tasks in specific industry clusters such as finance, management, or IT, that those respective companies are not fully equipped to execute. Outsourcing the work allows these companies to focus on their core business operations.
However, the consulting industry has not always had steady positive growth, as demonstrated by the stump in growth for consulting firms during the crisis.
We have seen a 40% decrease in activity within the France consulting sector. And, 95% of the firms had to resort to short-time work.
Figures from Syntec conseil show us how growth has fallen after the phenomenal rise in 2019. We can also see what the forecasts were for 2020 for consulting:
- 7% sales growth in 2019
- Annual growth rate in 2019: 8.6%
- 11.4% decline for the market as a whole in 2020
- 40% estimated drop in turnover for the strategy and management consulting market
The decline in growth varies depending on the sector in which consulting firms operate in. For example, firms with clients that work in the banking, hotel, or tourism industries were the most affected; however, firms in the consumer, private equity, and technology sectors have seen a greater rise in services during the crisis.
COVID-19 has contributed to various changes in the market, specifically in hiring and recruitment which increased by 33% at the end of 2020. This will be further discussed in the next section.
Resilience in strategy and management consulting:
Sectors of the consulting industry that cater to strategy and management, IT, technological innovation, and digital industries is well protected. This protection comes from the world's ever-increasing need for digital services which can now be performed remotely even better than in the past. IT consulting, in particular, has helped mediate the decline in growth expected from the consulting industry. So, although it is true that the consulting sector is one of the most impacted sectors, many innovation- and strategy-based consultancies have continued to succeed.
The COVID-19 crisis has taught these consulting firms something: they were already prepared to face such crises, and they have become even more adaptable and flexible than expected.
Consulting firms have learned how to digitize their business and train their consultants on this digital transition. This is what allows them to broaden their offerings to their clients and increase services.
In 2021, only 10% of the firms are using short-time work. Activity has almost returned to normal.
Innovation has become a large part of consulting this year in France. The COVID-19 crisis has enabled consultants to train each other, increasing their skills despite recruiting and hiring difficulties.
The crisis also created the opportunity for increased flexibility and innovation of new products and services due to the simple fact that customer demands have changed with the acceleration of digitalization and the growth of businesses.
The logistics and organization of work in consultancy have changed as well. Remote work has continued, and old procedures are being reevaluated. We could say that this was an opportunity to rethink the future of consulting.
2 - New market trends and challenges
Recruitment
" The major challenge for consulting firms is to recruit and retain the right profiles."
- The professional association representing consulting firms in France
"After having resisted the crisis well, the French digital market is experiencing very promising growth, stimulated by the digital transformation of organizations. However, digital companies are still facing a major talent shortage. "
- Godefroy de Bentzmann and Pierre-Marie Lehucher (co-presidents of Numeum) 2021
73% of assignments and projects stayed consistent during the crisis, however, recruitment and hiring took a pause for many management consulting firms, heavily impacting employees.
Consultants found themselves flooded with work with a staffing capacity of 100%. When recruitment resumed, the workload remained relatively heavy for employees.
Could this be one of the reasons for the new trend of freelancing? We can see here that retaining staff, in strategy consulting or other consulting practices, has become a real difficulty.
Even though the consulting industry has been able to adapt to imposed digitalization, it still faces many challenges. It should be noted that this transformation has contributed to the growth of consulting. 35% of assignments in 2019 were digital, which proves to be a promise of growth for the future despite the challenges.
The post-crisis growth of the digital sector has led to high demand for well-trained candidates. It is a sector that has created many jobs in recent years: 4600 jobs in 2020.
According to Numeum studies, the end of 2021 saw a growth in the workforce after the lifting of restrictions: +3.1% for the digital sector
Faced with strong demand from digital companies, there is a shortage of people with the skills required to support these companies in deploying new technological innovations.
New practices and mindsets?
What impact is technology having on the consulting market?
New digital tools, new practices in companies, artificial intelligence, and the automation of tasks through software are driving the growth of the market.
These elements have created new competitors; large players such as the GAFAs can become a threat.
"New players such as GAFA and quantitative research firms are playing an important role in the evolution of the consulting market. All these changes are creating a higher value-added offer from quantitative experts, opening the doors to consulting, and creating competition between "consulting players, digital players, and institutes in certain markets". NTS Advisory
Despite this new competition, the consulting market remains consistent with its main objective: to meet the expectations and needs of its clients as efficiently and professionally as possible.
Consultants, therefore, carry out their assignments with this objective in mind. They remain flexible regarding the evolution of the digitalization of consulting. They adapt and expand their digital offerings. With more than 30% of turnover linked to digitalization since 2018, adaption and change of business model are mandatory in consulting in 2021.
We can also see a trend of small firms deciding to form alliances to better respond to certain clientele calls larger than what they can manage solely by themselves.
The Stafiz platform allows you to digitize your consulting activity and save time. You benefit from real-time visibility on all your resources and costs to make better decisions and anticipate better.
Conclusion:
"While consultants are used to working in a variety of environments, the distance within teams imposed by telecommuting is unusual, and requires an adaptation in modes of collaboration. "
- Matthieu Courtecuisse, President of Syntec Conseil
These changes in the sector and internal practices are and will remain a challenge for consultants. 2020 and 2021 have
proved to be years of transformation and adaptation that leads to the presentation of growth and opportunity in 2022.
Consulting is facing a shift of expertise to meet new clientele needs related to digitalization and emerging challenges in today's market.
Management consulting, IT services, and technological innovation sectors, in particular, have made remote working widespread, moving towards more hybrid working methods in recent months in order to improve collaboration, the well-being of employees, and maintain top talent in the face of tough competition.
Digital transformation has allowed consulting firms to use new modes of communication and implement more flexible management styles. But, it has also given them the opportunity to extend their offerings and help their clients adapt their processes and run their businesses, manage their teams, and develop new tools remotely.
