• Smallest consulting market Luxembourg records strongest growth

• Questions remain about the viability of the region as a standalone market

Demand for technology consultants (up 5.3 per cent to €741m) helped the Benelux consulting market break the €2bn barrier for the first time in 2016, but questions remain around its viability as a standalone consulting market after growth slowed from 5 per cent in 2015 to 3.6 per cent in 2016.

These findings are published in a new report from the leading research and strategy firm for the global management consulting industry, Source Global Research. The report found Luxembourg, the smallest market in the region fared the best, expanding by 4.9 per cent to €228m, driven by a large financial services consulting market.

While the consulting market in the Netherlands experienced growth of 3.3 per cent to €1.18bn, there was a general acknowledgement that growth was hard won. Belgium also recorded modest growth of 3.6 per cent to €610m in 2016.

The Source report says that client confidence, dented by global instability and lacklustre economic performance, was partly to blame for the slow growth. Jan van der Oord, Partner at A.T. Kearney added: “In 2016, clients were a bit more hesitant than in 2015 or 2014. With more turmoil in the market, it took them longer to decide what they wanted to do.”

But, for all its challenges, the report points out that there are opportunities to be had in Benelux. 2016 was the year when interest in digital initiatives became really mainstream, with significantly increased take-up on the part of clients. There were also new types of initiatives around robotics and AI.

Zoë Stumpf, Head Analyst at Source Global Research said:

“Digital now being mainstream across the Benelux consulting market is good news for consultants, but digital demand is yet to really become the widespread driver of holistic change it is elsewhere in the world. 2016 was also a year where clients across Benelux had an overwhelming focus on more tactical initiatives. The approach to regulation in the region was a prime example, with clients limiting themselves to simple compliance rather than using it as a platform for transformation.”

On the increasing interest in robotics and AI, Mark Hofland, Capgemini Consulting’s Deputy CEO of the Netherlands, added: “Most clients think about how they can apply robotics to be more efficient. Potentially, it means fewer risks, more stability, more efficiency, and futureproofed processes. It's the old trick of increasing productivity. It's not a fundamentally new area of consulting. Its operational improvement but by different means.”

Financial services outperform the rest of the market

From an industry-perspective, 2016 was a mixed picture for consultants in Benelux. Financial services, the largest consulting industry in the region, provided consultants with another year of good growth – up 6.1 per cent to €617m in 2016. This demand was largely driven by continued high levels of regulation, as well as the need to respond to digital disruption, especially in the larger banking and insurance sectors. Healthcare and pharma & biotech also grew reasonably well, driven by a combination of regulatory, cost, and digital factors.

Joost Loves, Managing Director, Synechron, commenting on performance in financial services, said:

“The MiFID regulation has delivered a big boost to our revenues. It has a huge impact on the banking industry and means we can also deliver business process optimisation, new systems, functionality, and new operating models. The spin-off projects from our core MiFID work have been considerable.”

Zoë Stumpf from Source concluded:

“Consultants have mixed views about how the 2017 market will shape up. With continued slow economic growth against a backdrop of global instability, 2017 is likely to be another year of slow growth—but growth all the same. We continue to expect strong activity around the quest for efficiency, with a growing reliance on digital, robotics, and AI supporting wider back-office changes.”

For more information on Source reports contact alice.noyelle@sourceglobalresearch.com or telephone +44 (0)20 3795 2668/ visit www.sourceglobalresearch.com.

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