Belgian Consulting Industry

8/19/2019 Belgian Consulting Industry

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for mid-size regional players did not yield large results. If anything, these are niche providerswho spun off (or out) from the larger branded consultancies that trained them.

Methodology

We have divided the Belgian consulting industry into 3 segments: Management Consulting,IT consulting and Engineering Services. Each segment is made of 9 to 10 firms.

Although all its participants are called consultants, there can be gaping differences betweenthem , based on geographical reach, industrial or functional expertise, delivery and invoicingmodels, customer engagement methodologies, business development strategy and sales

processes, etc. Some firms belonging to the same segment are hardly comparable in terms ofskills, client typology and issues solved. Some firms from different segments also happen tomeet on the field in bidding wars to win the same deals.

However, very simple questions can be asked to all of these companies, who despite theirdifferences can equally address the worries of prospective candidates, such as:

- How much do they pay their people on average?- How much do they spend on training?- Are they profitable?- Do international consultancies use more local or “imported” staff to work onassignments?- How good are they at keeping people?- Are they on a growing trend?

Each of our report chapter brings a factual answer to one of these questions

Disclaimer: This report is a fact-based investigation using publicly available data . It doesnot proceed from an internal assessment of its performance and management team’seffectiveness. It has been assembled in good faith and its author should authorize anyutilization outside of this report . He can be reached at the following email [email protected].

Disclaimer 2: McKinsey and Bain do not provide detailed accounts of their activity, hencetheir absence here. We also made a choice to not include IBM , HP or TCS and Infosys, as itwould have been impossible to unbundle their Hardware-related business from theirConsulting business figures. This report is therefore about consulting pure players only.

I/ Are they on a growing trend?

Here below is a 2009-2013 overview of end-year FTE (Full-Time Equivalent) on each

company’s payroll.

mailto:[email protected]


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2009-2013 FTE EVOLUTION

MANAGEME

NTCONSULTING

2013 2012 2011 2010 2009

BCG 118 108 101 97 96

Accenture 715 703 750 680 724

RolandBerger 62 52 43 40 35

A.D. Little 25 27 30 33 35

AT Kearney 25 27 28 32 31

KPMGAdvisory 190 177 168 128 126

DeloitteConsulting 497 515 473 432 403

PWCBusinessAdvisors

58 56 55 42 43

E&YBusinessServices

358 144 95 73 70

Kurt Salmon 25 28 36 45 31

TOTAL 2073 1837 1779 1602 1594

IT CONSULTING 2013 2012 2011 2010 2009

McKinsey Solutions 59 47 28 N/A N/A

Capgemini 689 713 740 705 635

Sopra 71 71 60 56 59

Atos 768 832 882 591 647

Keyrus 87 92 83 66 90

Unisys Consulting 95 109 108 151 161

CSC 474 533 526 472 405

Adneom 137 146 114 37 13


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Analysis - Management Consulting FTE Evolution

The top10 shows a significant 30% headcount growth from 2009 through to 2013 (from 1594to 2073 FTE). The Belgian market for management consulting is proving resilient to the crisisdespite some actors being better than others at harnessing this growth.

All things being equal, E&Y seems to display an explosive growth pattern that we can’t

definitively assure the root cause of. However it takes part to the general trend of “Big Four”firms to engage more and more into management consulting.

2nd-tier firms such as Arthur D Little , AT Kearney and Kurt Salmon are on a bumpy roadwith important year-on-year variations and an overall 5-year FTE decline.

Analysis - IT Consulting FTE Evolution

The top 10 displays here a more modest 5-year FTE 8,7% growth.Here again, only one outlier: Adneom , who grew from 13 to 137 FTE in 5 years.

Trasys 272 284 301 292 359

Ordina 499 488 486 482 528

TOTAL 3151 3315 3328 2852 2897

ENGINEERINGSERVICES 2013 2012 2011 2010 2009

Altran 564 595 618 634 694

Alten 244 281 323 358 204

Assystem 93 69 38 11 1

Akka 387 379 330 302 267

Belgatech 122 101 56 40 12Pauwels 161 114 85 66 62

Matis 139 126 117 104 93

MCA 142 123 112 98 68

Intys 61 51 37 19 16

TOTAL 1913 1839 1716 1632 1417


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Steady decline from Unisys and Trasys along the emergence of McKinsey Solutions raisesthe hypothesis of a multidimensional IT services market involving heterogeneous growth

potential and business requirements.

Noteworthy is the fact that the IT consulting top 10 has declining FTE since 2011, whichraises the hypothesis of the growing usage of offshore-heavy managed IT & Telecom servicesthus requiring less onsite presence.

Analysis - Engineering Services FTE Evolution

The Engineering Services top9 has grown every year since 2009 from 1417 to 1913 FTE,which means a 35% 5-year growth rate. This growth has mostly benefited small entrantswhose size 5 years ago was only a fraction of what it is today (especially Intys , Assystem ,Belgatech , and MCA who have doubled in size or more) while incumbents have grown at amuch slower pace.

The outlier is Altran , who has – in a 35% growth market – lost positions to competitors eachyear since 2009. Altran losing presence in such a dynamic market might mean that the newentrants’ growth is happening at its expense. The question becomes: “What do they do

better?” and/or “What is Altran ’s problem?“ (Which is roughly the same question)

II/ How good are they at keeping people?

Here now is a 2009-2013 overview of each company’s yearly turnover. People turnover is ameasure of a company’s ability to retain people. We have computed it as follows: “Number orFTE out that year/Year-end FTE”. Another methodology was possible: “Number of FTE outthat year/Average FTE for the Year” but the results only slightly differed. If anything, the firstmethodology – the one we adopted - is more “flattering” due to end-of-year traditionalrecruitment efforts to “make the numbers” before the fiscal year closes.

2009-2013 EMPLOYEE TURNOVER EVOLUTION

MANAGEMENTCONSULTING 2013 2012 2011 2010 2009

BCG 33% 33% 46% 41% 24%

Accenture 17% 22% 23% 26% 36%

Roland Berger 11% 21% 19% 28% 23%

AD Little 28% 30% 33% 21% 17%

AT Kearney 28% 41% 57% 38% 48%

KPMG Advisory 15% 19% 17% 30% 25%

Deloitte Cltg 29% 22% 25% 26% 20%

PWC BusinessAdvisors 17% 23% 15% 33% 21%


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E&Y BusinessServices 15% 22% 34% 29% 20%

Kurt Salmon 72% 64% 56% 24% 10%

Average 27% 30% 32% 30% 25%

IT CONSULTING 2013 2012 2011 2010 2009

McKinsey Solutions 19% 9% 0% N/A N/A

Capgemini 17% 20% 24% 15% 21%

Sopra 18% 18% 23% 14% 15%

Atos 14% 12% 15% 16% 13%

Keyrus 18% 12% 11% 52% 16%

Unisys Consulting 13% 15% 67% 23% 20%

CSC 19% 12% 14% 11% 11%

Adneom 62% 67% 24% 41% 46%

Trasys 15% 19% 23% 40% 19%

Ordina 17% 20% 26% 22% 19%

Average 21% 20% 23% 26% 20%

ENGINEERING

SERVICES2013 2012 2011 2010 2009

Altran 35% 34% 39% 65% N/D

Alten 42% 56% 61% 34% 49%

Assystem 31% 26% 37% 18% 100%

Akka 25% 21% 24% 21% 19%

Belgatech 23% 12% 41% 23% 50%

Pauwels 16% 23% 29% 77% 31%

Matis 29% 29% 32% 38% 26%

MCA 42% 33% 35% 24% 15%

Intys 33% 35% 27% 42% 38%

Average 31% 30% 36% 38% 41%


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Analysis – Management Consulting People Turnover

With an industry average revolving around 29% during the 2009-2013 period, managementconsulting lives up to its reputation. Under certain conditions, a firm with a 28% employeeturnover or more could hypothetically be made of entirely different people after a 3,5 year’scycle. Of course this is a theoretical view, but quite revealing of the low survival rates theindustry is known for.

The obvious outlier is Kurt Salmon , with a rather impressive 72% rate in 2013, after already being the worst player in 2012 and second only to AT Kearney in 2011 (64% and 56%).

Analysis – IT Consulting People Turnover

The top10 IT consulting firms’ employee turnover is 22% for the period 2009-2013, it is thelowest of the 3 segments we’ve studied. Adneom ’s very high turnover resonates with its veryfast FTE growth (see above). Sustaining such a headcount growth next to such high turnoverfigures, Adneom ’s behavior yields the hypothesis of a high-speed recruitment process inwhich consultants become the expendable variables of a short-cycle “trial and error” strategy.This certainly proves efficient in the short run, but the thought that Adneom is currentlygrowing at the expense of its human capital - not along and thanks to it – is impossible toavoid.

Without Adneom as an outlier and Unisys ’ exceptionally high turnover ratio in 2011, theoverall top10 average turnover ratio would be closer to 18%

Analysis – Engineering Services People Turnover

Management consulting ratios seemed high at 29%: The top 9 Engineering consultanciesdisplay an average 35% turnover ratio on the 2009-2013 period. In such a context, headcountgrowth associated to employee churn put HR at the center of attention. When the averageengineering Services Company advertises its impressive recruitment objectives in business

press, little is actually known by normal folks about how even a 35% increase in the

workforce would merely offset the loss of all leavers.

The turnover ratios are one facet of the fact that engineering services firms live in a state of permanent crisis. This has many repercussions at all levels of these companies’ business performance, as we will see later in this report.

The two worst performers in the category are Alten and Altran . They incidentally are thelargest in terms of FTE count.

III/ How much do they spend on training?


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We computed this KPI fairly simply by dividing the yearly formal training budget by thesalary costs. This gives us a good view of how much is spent in training for each euro ofemployer costs. Each segment differentiates clearly from the 2 others in that respect.

2009-2013 TRAINING BUDGET (AS % OF SALARYCOSTS)


BCG 2,3% 2,6% 1,9% 1,5% 0,8%

Accenture 2,3% 2,9% 2,9% 3,3% 1,1%

Roland Berger 0,0% 0,0% 0,0% 0,0% 0,0%

AD Little 0,0% 0,0% 0,0% 0,0% 0,0%

AT Kearney 3,1% 3,3% 0,0% 0,0% 2,1%

KPMG Advisory 5,8% 6,8% 8,3% 9,0% 6,9%

Deloitte Cltg 6,0% 7,7% 7,4% 12,9% 10,0%

PWC BusinessAdvisors 0,0% 5,1% 0,0% 0,0% 0,0%

E&Y BusinessServices 1,2% 1,8% 2,4% 0,9% 0,2%

Kurt Salmon 0,1% 0,1% 0,0% 0,0% 0,0%Average 2,1% 3,0% 2,3% 2,8% 2,1%

IT CONSULTING 2013 2012 2011 2010 2009

McKinsey Solutions 0,0% 0,0% 0,0% N/A N/A

Capgemini 3,3% 3,0% 3,8% 4,4% 3,7%

Sopra 0,0% 0,0% 0,0% 0,0% 0,0%Atos 0,4% 0,5% 0,1% 0,1% 0,1%

Keyrus 0,1% 0,1% 0,1% 0,0% 1,8%

Unisys Consulting 0,9% 1,3% 0,3% 0,1% 0,1%

CSC 2,0% 2,4% 2,5% 0,8% 3,1%

Adneom 0,2% 0,2% 0,2% 0,3% 0,0%

Trasys 0,1% 0,1% 0,1% 0,1% 0,1%

Ordina 2,1% 2,5% 1,6% 1,2% 1,7%


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Analysis – Management Consulting Training Budget

2,46% of employee costs was dedicated to formal training in the top 10 of the managementconsulting industry within the 2009-2013 period. Deloitte Consulting and KPMG Advisory appear as the most significant outliers in the sample for their outstandingly high formaltraining costs.

Notably low performers are Kurt Salmon , Arthur D. Little and Roland Berger StrategyConsultants (close or equivalent to 0%, similarly to Engineering Services)

Analysis – IT Consulting Training Budget

Overall, 1% of salary costs was dedicated to learning by the top10 IT Consulting firms duringthe period covered by this report. A strong tendency to beat the average is noticeable atCapgemini , Ordina and CSC where training cost patterns similar to management consulting(2% and more) are observed.

On the other hand, McKinsey Solutions , Sopra , Atos , Keyrus , Trasys and Adneom practiceEngineering Services standards (near 0% formal training expenditures).

Analysis – Engineering Services Training Budget

Average 0,9% 1,0% 0,9% 0,8% 1,2%

ENGINEERING

SERVICES2013 2012 2011 2010 2009

Altran 0,2% 0,2% 0,2% 0,2% 0,2%

Alten 0,2% 0,2% 0,2% 0,1% 0,2%

Assystem 0,2% 0,0% 0,0% 0,0% 0,0%

Akka 0,1% 0,1% 0,1% 0,1% 0,1%

Belgatech 0,4% 0,4% 0,0% 0,0% 0,0%

Pauwels 0,3% 0,0% 0,0% 0,0% 0,0%

Matis 0,0% 0,0% 0,0% 0,0% 0,0%

MCA 0,1% 0,1% 0,1% 0,1% 0,0%

Intys 0,0% 0,6% 2,7% 2,2% 0,2%

Average 0,2% 0,2% 0,4% 0,3% 0,1%


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It is safe to say formal training budget is inexistent in the industry based on observable figuresand using benchmark provided by other firms claiming the “consultant” title.

At 0,2%, the top 9 Engineering Services training budget stands quite low compared to theirsocio-economic “raison d’être”: fostering the professional development of an elite of scarceR&D experts to change the world, save lives and improve daily life.

Aside from sporadic jumps in training costs from Intys , Belgatech and Pauwels, the top 9surprisingly sticks to the 0,2% average as if it were a cross-industry policy.

Recommendation: Couldn’t the marketing expenses (often bigger than training budgets by anorder of magnitude) be reduced to benefit the workforce and actually hold on the promise to“develop the skillset of the consultants?”.

IV/How much do they pay their people on average?

Salary costs as declared in the annual income statement represent the “all-in”cost ofworkforce, including the employer charges, employee taxes and various subtractions relatedto pension, health and social security. They provide a good proxy for average salary when oneknows the difference between the all-in cost (for the employer) and the net monthly salary(for the employee).

We recommend the use of a conservative 2,35 multiplier to compute the all-in/net salarydifference. Example: the average all-in salary per person at BCG was 104.255 ! in 2012. Thisgives 104255/(2,35*12)= 3@696 ! per month net per FTE on average. (!) This multiplier is only a proxy that works as long as current Belgian Labor and IncomeTax regulations do not change.

2009-2013 AVERAGE SALARY COSTS


BCG 114.422 ! 104.255 ! 116.710 ! 110.935 ! 123.773 !

Accenture 119.216 ! 108.313 ! 106.776 ! 94.014 ! 110.219 !

Roland Berger 112.749 ! 112.779 ! 101.615 ! 103.801 ! 116.736 !

AD Little 120.548 ! 122.118 ! 103.485 ! 86.799 ! 87.594 !

AT Kearney 147.001 ! 132.974 ! 161.288 ! 179.611 ! 153.391 !

KPMG Advisory 74.547 ! 70.239 ! 59.972 ! 67.713 ! 88.534 !

Deloitte Cltg 73.033 ! 72.093 ! 68.748 ! 68.206 ! 68.596 !

PWC BusinessAdvisors 70.124

! 68.948 ! 64.383 ! 63.742 ! 66.431 !


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Analysis – Management Consulting Salary Costs

E&Y BusinessServices 73.030

! 75.336 ! 78.883 ! 88.011 ! 76.341 !

Kurt Salmon 66.449 ! 69.542 ! 86.617 ! 67.820 ! 83.660 !

Average 97.112!

93.660!

94.848!

93.065!

97.527!

IT CONSULTING 2013 2012 2011 2010 2009

McKinsey Solutions 114.989 ! 109.545 ! 68.174 ! N/A N/A

Capgemini 87.364 ! 87.144 ! 89.830 ! 83.387 ! 90.088 !

Sopra 77.217 ! 70.795 ! 74.490 ! 79.952 ! 76.197 !

Atos 110.266 ! 106.440 ! 80.456 ! 89.382 ! 86.150 !

Keyrus 81.380 ! 70.149 ! 70.833 ! 66.953 ! 59.444 !Unisys Consulting 75.309 ! 62.363 ! 68.490 ! 61.612 ! 55.947 !

CSC 98.859 ! 95.611 ! 87.208 ! 87.466 ! 96.424 !

Adneom 57.246 ! 59.399 ! 39.469 ! 37.096 ! 21.421 !

Trasys 78.334 ! 77.216 ! 72.435 ! 86.598 ! 76.991 !

Ordina 73.310 ! 72.464 ! 71.758 ! 74.456 ! 72.565 !

Average 85.427 ! 81.113 ! 72.314 ! 74.100 ! 70.581 !

ENGINEERING

SERVICES2013 2012 2011 2010 2009

Altran 64.779 ! 65.686 ! 64.822 ! 63.103 ! 63.362 !

Alten 66.348 ! 67.284 ! 58.287 ! 65.107 ! 69.615 !

Assystem 53.502 ! 46.821 ! 35.616 ! 24.367 ! 63.647 !

Akka 58.756 ! 54.211 ! 53.460 ! 53.077 ! 52.241 !Belgatech 54.645 ! 43.068 ! 47.814 ! 37.753 ! 58.831 !

Pauwels 49.311 ! 46.287 ! 47.065 ! 53.905 ! 54.418 !

Matis 63.474 ! 60.776 ! 60.259 ! 51.796 ! 53.781 !

MCA 49.983 ! 52.805 ! 51.746 ! 44.559 ! 45.021 !

Intys 64.829 ! 61.506 ! 52.603 ! 59.010 ! 53.168 !

Average 58.403 ! 55.383 ! 52.408 ! 50.297 ! 57.120 !


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Although the highest amongst the 3 segments, management consulting salaries should beconsidered under an hourly perspective. It all comes down to how many hours per week oneworks to get the work done, and therefore how much is made by the company in terms of“invoiceable bandwidth”. These attractive salary levels are also a warning that customers do

pay for a work swiftly done, no matter the sacrifices made in terms of private life and hoursworked.

After a 4-year declining trend, the Management consulting Belgium top10 has recovered itsaverage salary levels of 2009.

There is a clear divide between “Big Four” management consulting practices and 1 St and 2 nd tier management consulting pure players, with the notable exception of Kurt Salmon , whosesalary costs per FTE stand closer to Big Four averages.Big four salary costs revolve around 71500 ! per year while top players go as high as 120000to 140000 ! per year.

Best in class for Belgian Management Consulting top10 is AT Kearney , although an averagesalary doesn’t necessarily mean all classes of staff get above-market compensation.

Analysis – IT Consulting Salary Costs

Broad generalizations are more challenging to extract from the top10 IT Consulting firmssalary costs analysis, with McKinsey Solutions and Adneom standing at the extremes of thespectrum (114000 ! and 57000 ! average salary costs in 2013).However, one interesting fact is that IT consulting salary costs from the Belgian top10 are theonly ones that display steady year-on-year increase, even at the worse moments of the crisis.

The other two segments have suffered average salary costs reduction, ManagementConsulting and Engineering Services recouping their 2009 level.Atos, CSC and Capgemini have consistently above-average salary costs across the whole 5-year period.Unisys Consulting and Keyrus have consistently been below average from 2009 to 2013.

Analysis – Engineering Services Salary Costs

Altran and Alten dominate the sample in terms of salary costs across 2009 through to 2013,closely followed by Intys and Matis who both only underperformed the average once, in2009.

The only consistently below-average player in the top9 Engineering Services firm is MCA .

Akka is the one consistently closest to the average. Other firms come and go above and below the average industry salary costs across the 5-year period.


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An important difference with Management Consulting or IT consulting is the ability of top9Engineering Services salary costs to “stick to the mean”, with firm-to-firm variances keptwithin a reasonable 10-20% range.

V/ Are they profitable?

To keep things simple, we are using Operational Margin per FTE as a KPI: (Total Revenue-(Subcontracting+Salary Costs))/Year-end FTE. Again, this is one of many KPI for

performance measurement; it can be improved based on actual management accountingfigures.

2009-2013 GROSS PROFIT PER FTE


BCG 15.294 ! 12.570 ! 40.118 ! 48.803 ! 49.352 !

Accenture 8.408 ! 4.669 ! -6.892 ! 10.032 ! 7.841 !

Roland Berger 34.360 ! 28.270 ! 18.204 ! 18.661 ! 41.772 !

AD Little 2.257 ! 15.744 ! -6.318 ! -10.561 ! 25.435 !

AT Kearney 21.125 ! 1.286 ! -48.125 ! -26.709 ! -14.946 !

KPMG Advisory 3.737 ! 4.168 ! 1.417 ! 1.124 ! 5.001 !

Deloitte Cltg 6.344 ! 1.118 ! 363 ! 1.953 ! 2.633 !

PWC BusinessAdvisors -69

! 649 ! 905 ! 1.279 ! 1.571 !

E&Y BusinessServices -205

! 3.796 ! 3.814 ! 417 ! 2.563 !

Kurt Salmon 3.002 ! 2.928 ! -29.393 ! 22.603 ! 9.493 !

Average 9.425 ! 7.520 ! -2.591 ! 6.760 ! 13.071 !

IT CONSULTING 2013 2012 2011 2010 2009

McKinsey Solutions 59.187 ! -567.597 ! -637.976 ! N/A N/A

Capgemini 5.418 ! -386 ! 1.783 ! 5.736 ! -4.475 !

Sopra 4.881 ! 4.304 ! -7.988 ! -1.503 ! -360 !

Atos 8.859 ! 14.233 ! 3.832 ! 4.952 ! -2.835 !

Keyrus 3.734 ! 5.024 ! 7.478 ! 3.344 ! 212 !

Unisys Consulting 5.247 ! 6.975 ! 4.350 ! 13.691 ! 9.772 !

CSC 18.140 ! 15.330 ! 12.106 ! 12.704 ! 19.410 !


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Analysis – Management Consulting Gross Profit per FTE

The top10 management consulting sample displays a V-shaped average gross profit curve,with 2013 average profitability levels per FTE still behind those of 2009. The upward trendcould indicate a higher utilization rate of resources, although firms with intensive use ofinternational resources from other offices (see last chapter) might yield superior profits fromthose while underutilizing their local staff. This would signify an improper resources-to-market alignment.

Nevertheless, The Boston Consulting Group and Roland Berger Strategy Consultants stand far above average gross profits per FTE. Other firms slalom above and below the top10average with no homogeneous pattern.

Adneom 6.321 ! -2.196 ! 6.431 ! 1.835 ! 320 !

Trasys 7.631 ! 7.016 ! 5.079 ! 6.679 ! 15.530 !

Ordina -4.527 ! -4.835 ! -1.772 ! -5.085 ! -3.440 !

Average (excl.McKinsey) 6.190

! 5.052 ! 3.478 ! 4.706 ! 3.793 !

ENGINEERI

NGSERVICES 2013 2012 2011 2010 2009

Altran 8.057 ! 9.738 ! 10.946 ! 11.216 ! 8.826 !

Alten 6.823 ! 11.180 ! 20.719 ! 14.258 ! 9.709 !

Assystem 12.580 ! 13.511 ! 22.137 ! 23.471 ! -1.102 !

Akka 7.143 ! 11.320 ! 11.412 ! 8.633 ! 5.778 !

Belgatech 4.030 ! 7.391 ! 11.735 ! 8.350 ! 23.857 !

Pauwels 19.295 ! 17.003 ! 16.606 ! 19.428 ! 19.035 !Matis 6.769 ! 4.315 ! 4.535 ! 21 ! -3.977 !

MCA 18.274 ! 27.924 ! 25.045 ! 12.443 ! 16.875 !

Intys 14.517 ! 11.000 ! 12.385 ! -4.483 ! 7.782 !

Average 10.832 ! 12.598 ! 15.058 ! 10.371 ! 9.643 !


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Analysis – IT consulting Gross Profit per FTE

The elephant in the room here is obviously McKinsey Solutions who boasts outstandinggross profit per FTE levels in 2013 and deep negative profits the first two years of itsexistence. Such an outlier was a liability to our average-based benchmarking, so we didn’tinclude it in our calculations.

Sopra and Capgemini seem to be recovering from negative profits incurred during the lasteconomic crisis, while Ordina has been operating at a loss during the whole period.Trasys and Atos are doing rather well, despite the 2011 trough that the IT consulting top 10firms seem to have all experienced, except for Keyrus and Adneom who had their 5-yearhigh that year.

Analysis – Engineering Services Gross Profit per FTE

Engineering Services top9 firms display a reverse-V shape in terms of gross profit per FTE,with 2011 a 5-year industry high. The downward trend since then could be a reflection ofoverall industry growth and penetration by new entrants. An additional feature of engineeringservices in Belgium is its commoditization, led by the appropriation of the sales process byclient’s Procurement management teams (at least for the most mature, largest customers)

The eroding profits hypothesis may be confirmed in 2014 financial results, which we willcertainly follow up on in the next report (September-October 2015)

VI/How intensely do they leverage their international presence?

Aside from the marginal use of contractors and external suppliers, we believe subcontractingcosts can be interpreted as the internal transfer cost of consultants from non-local offices. Ifthe assumption is true, Subcontracting Costs are a good indicator of both the use of foreignresources for Belgium-based assignments and of the market-to-capability alignment inBelgium itself.

2009-2013 SUBCONTRACTING COSTS/SALARY COSTS


BCG 233,2% 260,7% 227,4% 252,4% 171,0%

Accenture 149,3% 165,6% 138,0% 190,1% 179,3%

Roland Berger 160,2% 113,5% 132,4% 103,7% 115,9%

AD Little 145,8% 148,7% 151,4% 140,2% 155,7%

AT Kearney 196,5% 201,1% 148,1% 125,5% 186,0%

KPMG Advisory 123,7% 126,2% 126,9% 168,3% 125,8%


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Deloitte Cltg 136,1% 135,4% 252,9% 215,0% 222,8%

PWC BusinessAdvisors 134,4% 136,4% 128,1% 153,0% 156,9%

E&Y BusinessServices 98,9% 169,9% 193,8% 175,6% 234,1%

Kurt Salmon 89,6% 84,4% 93,4% 84,5% 87,4%

Average 146,8% 154,2% 159,2% 160,8% 163,5%

IT CONSULTING 2013 2012 2011 2010 2009

McKinsey Solutions 676,9% 1484,1% 1949,8% N/A N/A

Capgemini 30,2% 33,4% 42,7% 59,2% 39,0%

Sopra 45,5% 37,3% 35,1% 37,2% 42,0%

Atos 44,4% 50,0% 45,7% 31,2% 30,1%

Keyrus 43,3% 49,8% 54,6% 70,0% 49,4%

Unisys Consulting 92,9% 80,6% 94,8% 101,6% 94,2%

CSC 26,2% 25,3% 26,9% 31,5% 28,0%

Adneom 29,9% 32,2% 30,5% N/A N/A

Trasys 218,4% 193,0% 163,2% 132,6% 137,1%Ordina 73,9% 90,7% 93,4% 67,7% 56,5%

Average (excl.McKinsey) 67,2% 65,8% 65,2% 66,4% 59,5%

ENGINEERING

SERVICES

2013 2012 2011 2010 2009

Altran 69,6% 66,2% 66,2% 68,2% 57,1%

Alten 82,9% 60,9% 53,8% 43,3% 29,4%

Assystem 30,1% 37,5% 58,8% 111,9% 140,7%

Akka 33,5% 32,1% 31,2% 24,4% 24,0%

Belgatech N/A N/A N/A N/A N/A

Pauwels 107,8% 26,8% 29,6% 27,2% 132,8%

Matis 70,4% 75,4% 59,5% 60,4% 66,6%


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Analysis –Management Consulting Subcontracting intensity

As we work under the hypothesis that the bulk of subcontracting costs is actually internaltransfer prices for intra-company services, Belgium management consulting top10 firms arethe heaviest users of external help from their colleagues in Europe or beyond.

The management consulting top10 displays extraordinary use of non-local resources. Lookingat the 5-year averages though, this trend is slowing down (from 163,5% down to 146,8%).

Notable above-average outliers: BCG , AT Kearney and Accenture. The only below-averagefirm is Kurt Salmon .

Analysis – IT Consulting Subcontracting Intensity

Again, the setup of McKinsey Solutions ’ activities weighs in heavily. Their sky-highsubcontracting-to-salary cost ratio is indeed declining as the business rises in autonomy,although it remains at 7 to 1 2013.

Between 2009 and 2013, the top 10 IT consulting firms (excluding McKinsey Solutions ) hasgrown from 59,5% to 67,2%. This could be the reflection of the increasing use of offshore andlow-cost country resources, especially in the case of IT managed services that require alimited exposure of back-office employees to the end customer.

Analysis – Engineering Services Subcontracting Intensity

With averages similar to the IT Consulting market and after a 2011 low at 43,4%, theengineering services top 9 shows a recovery in subcontracting ratios at around 65%.

Belgatech is the only firm without foreign branches to get resources or work done from.

Among the 4 dominant players ( Altran , Alten , Akka , Assystem ), there’s a clear divide between high usage of subcontracting from Altran and Alten (consistently above averagethese last 3 years) and a low usage of it by Akka and Assystem , especially these last twoyears.

Conclusion

A yearly follow-up version will be published on the website of Eidos InSight during theSeptember/October (to ensure all companies ’financial statements have been published)

MCA 63,8% 55,2% 47,8% 39,7% 42,3%

Intys 56,9% 64,8% 0,0% 0,0% 0,0%

Average 64,4% 52,4% 43,4% 46,9% 61,6%


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Belgian Consulting Industry

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