First signs of a turnaround: more Nordic consulting firms are growing and hiring again

Cinode has reviewed the quarterly reports of 24 listed consulting firms in Sweden, Finland and Norway. Average growth was −0.1 percent and median growth 1.0 percent, up from −0.7 percent in the second quarter. 13 of the 24 firms increased their revenue.

Growth is still acquired

The fastest growing firms are growing through acquisitions. Exsitec (+22.9 percent), Gofore (+19.7 percent) and CAG (+10.7 percent) all have organic growth of three percent or lower. Only four firms grew organically by more than two percent: Combitech, Proact, Exsitec and Addnode.

"After the second quarter I said I wanted to see organic growth above two percent, and firms starting to hire again, before we could talk about a turnaround. Now more firms are starting to hire, but organic growth is not there yet," says Mattias Loxi, co-founder of Cinode.

Profitability is lower than last year

The median operating margin (EBIT) was 5.1 percent, compared with 5.4 percent a year ago. The EBITA margin fell to 6.3 percent from 7.1 percent. 13 firms saw their margin decline and 9 improved it. Many firms have new cost programmes that weigh on the quarter but are expected to pay off next year.

More firms are hiring again

In total, the firms reduced their headcount by 863 employees during the quarter, partly due to divestments. But ten firms grew their headcount, compared with five in the second quarter. Tieto plans to recruit up to 1,000 consultants in AI and data.

"Firms starting to hire is the most important signal of the quarter. Nobody recruits consultants unless they see demand holding up," says Mattias Loxi.

Engineering consultancies pull ahead, AI shows up in the numbers

The engineering consultancies are growing faster and have higher margins than last year, driven by energy, infrastructure and defence. The IT firms are essentially standing still. Several firms see price pressure easing, and AI has started to show up in the income statement, both as new assignments and as a cost. Softronic reports SEK 2.7 million in the quarter for external AI models.

The bottom has been reached

Several CEOs see signs of recovery towards the end of the quarter, and order intake is growing at several firms. At the same time, Tieto believes the recovery in the Nordics will take longer than in the rest of Europe.

The tone brightened month by month, and many CEOs describe September as the strongest month of the quarter. The exception is the Gothenburg region, where the weak automotive industry is still holding back demand.

"The CEOs grew more positive with every month of the quarter, and for many September was the strongest month. We are seeing the same development among our own customers in October and November. The Gothenburg region is an exception, but positive signals are now coming from several directions at once. Everything points to the bottom having been reached," says Mattias Loxi.

The full review, with tables for every firm, is available at cinode.com/en/blog/economic-reports/first-signs-of-a-turnaround-more-consulting-firms-are-growing-and-hiring-again/