Every year, we evaluate the attractiveness of each consulting market in response to a simple question: Looking at the next 12 months only, where should you invest?, writes Julie Ahadi of Source Global Research...

The results for 2019 are in, and taking pole position for the fourth year in a row is the DACH region (Germany, Austria, Switzerland). Beating 17 other contenders to the top spot, the DACH market has even managed to widen its lead over the second-placed market, which this year is the US. A solid performance then. But what’s so good about the DACH consulting market? And are there any reasons to be cautious?

With attributes ranging from the highest average revenue rates in the world to a large and skilled talent pool, DACH offers consultants a fantastic set of conditions. Its standout industries include financial services and manufacturing—and automotive in particular—and these are not only performing well at the moment, but look set to remain buoyant going into 2019. That’s particularly the case with regard to implementation work, as clients continue work on digital transformation initiatives. Throw into the mix relatively stable political and economic conditions (we’re talking stable compared with the UK, France, and the US here) and what we have overall is a pretty attractive place to do business.

There are, however, reasons for caution.

No doubt describing the political and economic conditions as “stable” will have raised a few eyebrows for a start, even once qualified as being relative. In fact, the overall attractiveness score for DACH has fallen—this is a less attractive place to be a consulting firm than it was 12 months ago. DACH only remains top by virtue of the fact that the other three markets in the top four have also seen their scores downgraded.

Sitting behind this are growth prospects for 2019 which, while still decent, look a little muted: Indeed, DACH only places mid-table by this particular metric. Our assessment is that growth prospects in the region are being affected both by client fatigue after a long phase of transformation, and by a broader sense that a cyclical readjustment could be due after eight straight years of growth. Though there’s nothing in theory to stop a consulting market from continuing to outpace broader economic growth, history suggests that it rarely does so for more than about seven years in a row, at which point clients start to look around their organisations and conclude that they probably ought to be doing more themselves.

And then of course there’s Brexit, which doubtless holds opportunities for German clients in some form, but it’s also causing uncertainty here just as it is elsewhere.

And lastly, we suspect that the transition to a new model of consulting—one that places a greater emphasis on things like assets and managed services—could be particularly unsettling in this most traditional of consulting markets.

So, while the overall picture is of a market that remains more attractive than any other it isn’t without its flaws. As a result, any consulting firm currently operating in DACH would be wise to make the most of the good conditions, but also be ready for the road ahead to feel a bit bumpier than in recent years.

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Julie Ahadi is a leading commentator on the consulting industry writing for Source who provide specialist research on the management consulting market to consultants and their clients.