Kennedy Analysts Forecast: Growth in Eastern Europe Will Outpace Modest Gains in Western Europe
For a closer look at the European consulting market, Consulting magazine turns to two analysts for insights into the region and its opportunities. In Kennedy Consulting Research & Advisory's latest report—"Europe Consulting Marketplace: Key Trends, Forecasts and Profiles"—KCRA's Karen Nickel Anhalt, Associate Director, EMEA Research Lead and Research Analyst Tomek E. Jankowski, provide insights into consulting in Europe. More information about the report is available at www.kennedyinfo.com/consulting.
Consulting: What's the status of the European Consulting market right now?
Nickel Anhalt: The consulting market in Europe is stable and improving. Overall demand for consulting services is recovering from a steep decline in 2009. Companies and organizations are responding to lessons learned by engaging consultants for assistance in cutting costs, reducing complexity and improving transparency as well as incorporating compliance with new regulations into their business processes. At the same time, they are keeping an eye out for prospects in the uneven growth markets of Eastern Europe and the rest of the world.
Consulting: What's the key takeaway from the research you've conducted?
Nickel Anhalt: I'd say there are a few key takeaways in terms of client pain points that consultants can help manage and solve. The main challenge is that the business environment has changed—it is more complex and unstable than before. For the short-term, companies across most industries are in a world of pain now and need help adapting to a new and less hospitable environment, but at the same time, these clients don't have a lot of money to spend, creating challenges for firms. Companies need to understand and protect their vulnerabilities, they need to simplify their processes and systems to operate better and with greater transparency, and they need to increase their agility so that they can respond to rapid change.
Consulting: What's the most surprising aspect of what you uncovered in the report?
Nickel Anhalt: I think there was a general expectation that post-financial crisis companies would launch growth-oriented strategies. But that was wishful thinking. There is still too much to be done in terms of cost reduction and performance improvement. If you look at the financial services sector alone, the need for streamlining processes, simplifying IT and improving transparency is immense. We also noticed that when companies talked about growth, they talked about needing an emerging market strategy, since the only palpable growth in the foreseeable future will come from the emerging markets.
Consulting: Where are the biggest consulting opportunities in the European market?
Jankowski: The biggest opportunities are still in the biggest markets, but the most dynamic opportunities are in markets in Eastern Europe, where a few countries are leading Europe in GDP growth. Acceptance of advisory services is pretty low in Eastern Europe, but it is gaining ground and consulting firms are making headway both with MNCs operating in the region and with local clients—public sector and private—as well.
Consulting: How do you see the European market evolving, both near and long term?
Nickel Anhalt: Western Europe will continue to see slow growth for the next several years. Eastern Europe will experience a stronger rate of growth, but because it is small, overall growth will be slow. Much of how the market evolves in Western Europe will be determined by how the EU handles the Greek debt crisis. If it handles this crisis well then the result will likely be a more closely-integrated EU, with positive implications for regulations and markets.
Jankowski: The crisis' resolution will be as impactful, of course, for Eastern Europe, where nine countries are EU member states and three more are candidates, but the real challenge for Eastern Europe will be managing growth, helping clients in these countries get past the 'Wild West'-style growth of the past two decades and break through to the next level, and topics like leadership development, succession planning, governance and organizational efficiency, risk management, contract dispute resolution, etc. will be the big demand-drivers for the next few years.
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