Source Global Research report finds huge growth in digital-related work in DACH’s HR and change management consulting service line.

As revenues from digital transformation work in the DACH consulting market rapidly grew to €3.48bn in 2018, companies across the region increasingly called on consultants to help manage the people impacts of this new technology.

As a result, the volume of digital-related work in DACH’s HR and change management consulting service line increased by an incredible 61% in 2018 and now accounts for more than a fifth of all the consulting work happening in this service line. Overall growth in this service line, which is now worth €725m to DACH consultants, increased in 2018 to 5% (compared to 3.4% the previous year).

Overall the DACH consulting market grew by 8.2% to reach a total value of €10.69bn in 2018 with Germany, the region’s largest consulting market, leading the way with 8.5% growth.

This data is published in a new report, The DACH Consulting Market in 2019, from Source Global Research, the leading research and strategy firm for the global professional services industry. Source surveyed 561 senior clients of consulting firms across the DACH region and interviewed very senior consultants from most of the leading consulting firms in the region. The report also found that with the pace of digitisation accelerating across the region, digital projects now account for roughly a third of all DACH consulting work.

Germany – Switzerland – Austria markets
The Source report says that with companies in Germany now taking a more comprehensive approach to digital transformation, lots of work is being generated for consultants. Digital transformation is happening from the front to back office, as clients transition from ERP-based systems to cloud-based infrastructure, pursue supply-chain innovations, and look to revolutionise the customer experience. This is impacting a range of sectors that are already undergoing disruption and profound structural change.

Wim Van Hennekeler, Head of Cognizant Consulting for Germany and Benelux, says:
“RPA is driving a huge amount of work. I suspect it will explode in Germany, because the market is more labour intensive. It will have a huge impact on people and change work as clients will need to reskill their organisations.”

For a small country, Switzerland has sizeable financial services and pharma & biotech sectors, and both consistently drive good levels of consulting work.

The consulting market in Austria grew more impressively in 2018 compared to the previous year, with financial services a particularly good market for consultants, especially within the insurance industry. Healthcare, pharma, and the public sector were also strong performers.

Dr. Uwe Michel, Member of the Managing Board, Horváth & Partners, adds:
“The structure of the market in Austria is different because there are only a few big companies and many medium-sized ones.”

Managing the people impact of digitisation
The Source report says that where there has been fear in the past—especially in Germany—that automation and the introduction of machine learning could impact prized low unemployment rates, labour shortages are currently such that anything that can ease them is welcomed enthusiastically. This has meant that consultants are now heavily engaged with workforce planning and re-positioning exercises, as clients look to move their people away from tasks that can be automated to those that are likely to have a more positive impact on the top line.

Zoë Stumpf, Head of Market Trends at Source Global Research, says:
“It had been feared that digital transformation was likely to be a job destroyer, but clients are now appreciating that digital tools can be used to augment the work of employees, increasing their productivity rather than replacing them. Making sure employees have the skills needed for higher-value, technology enabled work is creating strong demand for consulting work.”

Despite a current strong overall market performance, DACH consultants continue to fear that a cyclical downturn could bite in 2019. The expected worsening in economic performance across the region, and the spectre of a number of global headwinds, all have the potential to derail the current growth trajectory.

However, Zoë Stumpf, at Source Global Research, adds:
“Despite these concerns, it’s our view that this market will continue to turn in a strong performance that would be the envy of many others right now. In Germany, we anticipate an increase of 7% in 2019, and we estimate 5% growth for Switzerland and Austria’s consulting markets.”

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