London: The huge financial services consulting market has outpaced the UK's consulting market growing by over 7 per cent to £1.8billion. The UK market also experienced positive growth — up 4.8 per cent to just under £5.6bn — and is predicted to grow by between 5-10 per cent in 2014 — making it one of Europe's star performers.
A Source Information Services report released today says that the financial services consulting market, which accounts for about a third of the entire UK market, has delivered most growth in revenue terms to consulting firms as the sector continues to be dominated by work connected with regulation and remediation. Banks, in particular, have little capacity to undertake any other type of work because of the cost of implementing regulation driven measures.
Retail the fastest growth sector...
The highest rate of growth (8.6 per cent) was found in the retail sector (£241million), which is grappling with multi-channel and the need, amongst traditional retailers, to close the gap between themselves and the likes of Amazon. Healthcare also showed strong growth — up 6 per cent to £218million.
Edward Haigh, a director of Source and an author of the report, said, "The prospects for growth look good in the all-important financial services sector and when this firing the UK consulting market takes some stopping. But the star of the show will probably be the retail sector, which is grappling with the challenges it faces in a multi-channel environment and calling on consultants to help it as it does. Retailers drive a hard bargain and will often expect consultants to commit to delivering specified outcomes, but we still expect double-digit growth in the sector's consulting market."
Technology consulting hits £2billion landmark...
In terms of services, technology consulting dominated in 2013: growing by an impressive 7 per cent to a value in excess of £2bn.
But the report says that there's evidence of a shift away from big ERP implementation projects and towards strategy, digitisation generally, and specific new technologies. Operational improvement was another area of growth (5.6 per cent) — a reminder that while the economic situation has improved, concerns remain.
Big Four grows at twice the rate of any other firm type...
The Big Four did especially well in 2013, growing at twice the rate (8 per cent) of any other firm type. These firms have been especially acquisitive recently, so part of their success can be attributed to them buying market share, but they're picking up a lot of work in the all-important financial services sector.
Michael Robinson, UK Head of Management Consulting, KPMG, said, "For 2014 we believe that a key driver for work in all sectors will be based on how technology is used to transform business and we will continue to see CIO agendas, cyber and technology enablement set around customer and digital developments. In particular, mobile applications, the next generation business process management tools, data and analytics and cloud based solutions will reduce dependency on the provision of services from the in-house IT function. This will enable the CIO to grapple with the issue of protecting the business from cyber threats, seeking to significantly improve service and simultaneously reduce cost."
The outlook for the UK consulting market remains positive: with over a third (34 per cent) of clients expecting consulting expenditure to increase in 2014, while just a quarter (26 per cent) expect it to decrease, and Source is forecasting growth in every sector and service line. Cost cutting is the activity that most clients (93 per cent) will be working on over the next 12 months. Culture change and M&A — are the only two areas where UK clients are more likely to bring in consultants than they were last year.
Dena McCallum, Co-Founder, Eden McCallum, concluded, "There's a real sense of buoyancy in the market and a lot of opportunities to go for, so the challenge for us is to prioritise. Focusing on what we do well in such a way that we don't constrain future growth is going to be absolutely critical."