Posted , in Business model
Brazil: does the election change anything?
I can’t imagine there are many consultants in Brazil cheering the election result. A narrow 3% margin keeps the economy in the hands of interventionist Dilma Rousseff, and that’s not the result consultants wanted to hear.
The election had more twists and turns than your average thriller novel, causing the consulting market to slow down while clients put off making major decisions and investors hedged their bets, waiting to see the outcome. The uncertainty was noticeably stifling the economy, and an even bigger distraction than the World Cup.
Our research took place in the month before the final run off, and not one of the consultants we interviewed had anything positive to say about the prospect of four more years of Workers’ Party (PT) rule. Not all of them were negative – some made neutral comments that the world would keep turning whatever happened – but neutrality is far cry from an endorsement. Many will be very disappointed that Aécio Neves, who consultants perceived to have answers to the problems with the economy, isn’t the person taking the reins to steer Brazil out of recession.
It’s difficult to say now what impact the election result will have on the economy, and in turn on the consulting market; the consultants we spoke to had a wide range of opinions, hopes, and fears. One worried that the economy could be taken down a Venezuelan route (things aren’t working out too well over there); others felt that another Rousseff presidency would mean a continuation of economic interference and at least 18 months of tough conditions; some shrugged it off and said their clients still need them and that the result, either way, would breathe life back into the consulting market as clients could at least plan with more certainty.
Perhaps your opinion depends on who your clients are – if you serve mostly multinationals, already embedded in Brazil and the wider region, they’re still going to need your help to keep up with their global competition. But if you’re serving domestic clients, who may be feeling the pinch of the recession more acutely, you may be worried their scrutiny of their consulting spend could ratchet up.
But it’s not like the market is dreadful. We think it will grow 2.5 to 3% in the next year or so – a level of growth that consultants in many flat European economies would sell their grandmothers for – and it’s a market that’s maturing. Right now, clients want to trim the fat from their businesses, invest in new technology, and generally lay the foundations for when the economy does pick up again. The efficiency agenda was around long before the election, and will continue if the government doesn’t get a grip on the economy, but those priorities should mean plenty of opportunities for consultants – and some pretty exciting ones at that.