GENERAL TRENDS IN THE MANAGEMENT CONSULTANCY IN CENTRAL

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GENERAL TRENDS IN THE MANAGEMENT CONSULTANCY IN
CENTRAL EASTERN EUROPE (CEE)

• by Janko ARAH
• PRAGUE, APRIL 20th, 2006

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CONTENTS

• 1. A region of 27 countries
• 2. Profoundly changes
• 3. Outsourcing in CEE
• 4. General trends in MC in CEE

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1. A region of 27 countries

• 3 sub-regions
• - the 8 new members of the EU (bordering Western
  Europe)
• - south-east Europe and
• - Russia and the rest of the former SU
• There are 8 members in FEACO from CEE
• Bolgaria (BAMCO)
• Bosnia and Herzegovina (LESPnet)
• Croatia (UPS AMC)
• Czech Republic (APP)
• Hungary (VTMSZ)
• Poland (SDG)
• Romania (AMCOR)
• Slovenia (AMCOS)

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Size (in bill EUR) of the European MC-Market,
1996 - 2004
3,5
3,7
11,5
-2
15,5
16
15
15
14
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Management Consulting (MC) as a Percentage of the
GDP Europe, 1996 - 2004
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The European MC-Market Composition by
Country/Region, 2004
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Average Growth Rates by Size of Consultancy, 2001
- 2004
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The European MC-Market Composition by Service
Line, 2004
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The European MC-Market Composition by Key
Industry Sector, 2004
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The 15 Largest Global OM Consulting Practices
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2. Comparison of Consulting in Selected CEE
Markets

• TurnoverMC Market GDP GDP Pop.
• in MC Growth (a) Growth in mio.
• Czeck R 400 4 126 3,7 10
• Poland 300 30 339 5,6 38
• Hungary 226 5 109 3,9 10
• Romania 107 35 125 8,1 22
• Slovenia 90 10 28 3,9 2
• Bulgaria 56 7 45 5,3 7
• In million Eur (a) Purchasing Power Parity
• Source Management Consulting International,
  February 2006

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Czech Republik Management Consulting Market by
Service Line
Source FEACO
13
Hungary Management Consulting Market by Service
Line
Source FEACO
14
Romania Management Consulting Market by Service
Line
Source FEACO
15
Slovenia Management Consulting Market by Service
Line
Source FEACO
16
Bulgaria Management Consulting Market by Service
Line
Source FEACO
17
Key Figures of Selected European MC-Markets, 2004
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Daily Effective CEE Partner/Manager Fee Rates
Contrasting Countries Firm Size
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Daily Effective CEE Senior Consultant Fee Rates
Contrasting Countries Firm Size
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Daily Effective CEE Consultant Fee Rates
Contrasting Countries Firm Size
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Daily Effective CEE Junior/Associate Fee Rates
Contrasting Countries Firm Size
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3. Outsourcing in CEE

• - from invoicing to advanced research and
  development
• - Accenture, Capgemini, IBM
• some multinationals, like Lufthansa, General
  Electric...
• - economic benefit - capital involved
• - CEE cannot compete with China or India on wage
  rates, but it has other advantages
• - broad knowledge of European languages
• - for call centres, it is better to have them
  in the same time zone, to enable them to respond
  quickly
• - geographic proximity

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4.1 General trends in MC in CEE

• - MC has developed significantly
• - in 2004, nearly 96 of the 48,5 billion Euro MC
  turnover in Europe was generated within the
  Western-European countries and 4,1 in CEE
• - typical daily fees 100 - 1000 EUR
• MC can be optimistic about the future
• - potential growth rate varies between 4 -35

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4.2 General trends in MC in CEE

• - the importance of reliable local partners will
  increase, due to language barriers, to the
  knowledge of the local business culture and to
  local client contacts
• - privatisation and public market projects
• - private sector and services such as business
  strategy, organisation development, human
  resources and IT consulting
• - outsourcing - a key driver of the industry
  development
• - clients ask not only advice, but implementation
  and operation services as well
• - speed, quality and value added, comprehensive
  solutions are going to be of key importance