Consulting firms continue to face challenges in the second quarter

Despite favorable calendar effects, growth remains low for consulting firms in Finland and Sweden for the second quarter. The average growth was 3.1 percent, compared to 7.5 percent last year. However, this was a step in the right direction considering the negative growth in the first quarter.

The number of layoffs in the industry continues, and 70 percent of companies have reduced their number of employees. This is shown in Cinode’s latest summary of the Q2 reports from publicly listed consulting firms.

“Demand remained weak in the consulting industry during the second quarter. IT consultants, in particular, have had the toughest time, with a surplus of roles like system developers. However, there is significant variation in the market. Sectors such as energy, defense, cybersecurity, and certain parts of the industry remain stable,” says Mattias Loxi, co-founder of Cinode, the leading SaaS platform for consulting firms.

Combined X, Addnode, and Norconsult grew the fastest, largely through acquisitions.

“Many companies are reporting a somewhat more positive outlook at the end of the quarter, but the real turnaround is expected to occur toward the end of the year. Operating margins have primarily been maintained through personnel cuts. The average margin increased to 6.1 percent (from 5.1 percent) compared to last year.

Exsitec, Gofore, and Avensia have the highest margins.

“Several companies have implemented staff reductions, and 70 percent of consulting firms have fewer employees compared to the beginning of the year. Costs have decreased, and we believe that the major cuts are behind us. Companies are likely to start hiring and acquiring businesses again towards the end of the year when the market turns around,” Mattias concludes.