Management Consultancies Association (MCA) Industry Report 2007/8 released today (29 May 2008) finds traditional management consulting grew by 10 per cent to just under £6billion…
A new Management Consultancies Association (MCA) Industry Report, published today (29 May 2008) has found that consulting industry growth is lower than in the previous two years with traditional management consulting increasing by 10 per cent in 2007 to just under £6billion .
While this lower level of industry growth reflects broad economic uncertainty, financial services (the largest sector for consulting at £1.4billion in 2007), remained comparatively strong – up 20 per cent. However, demand in the banking sector, one of the most important sectors for consulting firms, grew by only 5 per cent. While this reflects wider upheaval in the UK and global economy, most consulting firms say that clients are deferring projects rather than cancelling them outright.
The new report, ‘The UK Consulting Industry 2007/08’ published by the MCA in conjunction with PMP and IRN Research, and sponsored by CODA, also identifies the other main sectors of growth as the telecoms and high-tech sector (up 19 per cent to £625million) and energy, utilities and mining sectors (up 14 per cent to £623million).
Hugo Were, MCA President 2008-09 commented:
“As has been widely reported, recent stock market turmoil has affected the wider UK economy, and MCA figures reflect these market conditions in some areas. However, financial services; a very important sector for management consultants continues to remain strong in 2007 – increasing by 20 per cent, and the telecoms and high-tech sector also remains buoyant, up by 19 per cent on the previous year.”
“In recent years management consulting has become an important and integral part of business life in the UK, and a part that adds substantial value to British business. With increasing global economic uncertainty, management consultants are well placed to impart effective advice and support and help implement change and transfer skills; ensuring organisations are well equipped to deal with the challenges ahead.”
Key Service Lines
The new MCA report also identified the following demand for management consulting service lines:
- IT consulting increased 16 per cent on 2006 to £1.7billion – confirming its position as the most important consulting service in financial terms.
- The second largest market was Programme/project management – up 8 per cent from the previous year to £1.2billion.
- Economic and environmental studies grew most (up 186 per cent, albeit from a much smaller base) suggesting a growing demand for help in dealing with carbon issues and other environmental challenges.
Sector Employment Trends
MCA member firms employed just over 33,000 consultants in 2007, up 9 per cent on 2006. Recruitment was highest in the area of outsourcing advice, up 14 per cent, compared to 10 per cent for ‘pure’ management consultants. Recruitment appears to have been most difficult in IT-related consulting as, despite substantial growth in demand, the numbers of IT consultants increased by only 6 per cent.
Fiona Czerniawska, author of the report, and Director of the MCA Think Tank concluded:
“Most firms report more caution among clients so far as spending on consultancy is concerned, rather than a dramatic fall, but it is not yet clear how the industry will perform in 2008. Budgets are unquestionably tighter, but clients are still prepared to spend money on external help, especially where it is tied into improving efficiency and reducing costs.”
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About the Management Consultancies Association
The MCA was formed in 1956 to represent the consultancy industry to its clients, the media and government. Management consultancy is an increasingly important industry for the UK economy with management consultancy revenues for 2007 estimated at around £8bn. MCA members represent around 70% of the UK consulting sector, employ around 30,000 consultants and work with most of the FTSE100 and all government departments. Eight of the top ten UK-based consulting firms (by consulting fee income) are members.
The MCA supports its member firms with a range of services including events, publications, interest groups and public relations. The Association also works with its members to attract the top talent into the industry. The MCA provides advice on the selection and use of management consultants and is the main source of data on the UK market
About this report
This report, sponsored by CODA, has been compiled using statistics provided by MCA member firms, covering the calendar year 2007. The term ‘fee income’ is used throughout the report to denote the UK management consulting fee income from MCA member firms. It is estimated that MCA firms currently represent 70 per cent of the UK consulting market in fee income terms.
Estimates have been included in the minority of cases where individual firms have not been able to provide some of the information requested. Unless otherwise stated, the figures are as reported by MCA member firms; where like-for-like comparisons have been made, adjustments have been made to reflect changes in the MCA membership.
In addition to the quantitative data assembled for this report, senior executives from around 80 leading consultancies in the UK were interviewed between January and March 2008.
Please note: while the MCA makes every attempt to ensure that its figures are an accurate reflection of its members fee income, deciding where one consulting service starts and another ends can be difficult. Our analysis of the breakdown of consulting fee income by service line should therefore be read as indicative, rather than a definitive statement, of overall trends.
About the report Sponsor – CODA
CODA is the choice for finance professionals who need business software and services they can count on. We provide award-winning solutions that help organizations to streamline and automate their finance processes (from accounting and procurement to reporting and analysis) and to achieve better compliance and corporate governance. CODA applications work seamlessly with each other or independently and they integrate with other leading operational systems to maximize the return on your broader IT investment too. And our products are all underpinned by expert consultancy, training and support services, delivered by teams of experienced accountants, business analysts and technology specialists.