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Technology consulting to drive growth in 2014, says Source report

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London: The demand for technology-related consulting will drive growth in 2014, with a quarter of organisations expecting to increase their spending in this area by more than 10 percent.

These findings, based on interviews with over 600 senior users and buyers of consulting services, were published yesterday by specialist consulting research group Source Information Services.

The new Source report shows that around half of organisations will increase their use of consultants to either improve existing technology or exploit new technology.

Source says that the next biggest area for growth is operational improvement, but while strong, interest is more measured, with only 19 percent predicting that the rate of increase will be higher than 10 percent. Almost half (43 percent) of organisations expect business strategy to grow.

M&A and simplification work predicted to be in demand

Advice on M&A — historically one of the key drivers of growth in the consulting industry but hugely overshadowed by the financial crisis in recent years — finally shows some signs of life. In 2013, less than half of organisations claimed to be actively looking at this area, but this has jumped to almost two thirds (59 percent) in 2014 — the biggest increase of any of the client needs asked. Simplification is also a buzz word across organisations as they plan to strip out the complexities accrued prior to the financial crisis and left unchallenged. The majority (81 percent) of organisations say they plan work around this issue in the next 12 months.

Fiona Czerniawska, co-founder of Source and an author of the report commented, "Our sense is that the growth agenda is being slightly eclipsed by the technology agenda, and specifically the digital technology agenda, as the majority of organisations tell us that they want to take advantage of digitisation, mobile and other new technology."

"That clients are planning to do more and on more fronts than they were in 2013 can only be good news for consultants but we shouldn't automatically jump to the conclusion that this will result in greater use of consultants. However, understanding which activities are more likely to drive consulting work and why gives us some sense of how clients will spend in the coming year."

Public Sector remains depressed

The reasonably positive picture for consultants in the private sector contrasts with the more depressed public sector market. The proportion of organisations expecting to spend more is substantially smaller than in the private sector and the proportion expecting it to shrink is much larger — almost twice the size.

Retail is set to be the boom sector

Virtually no one in the retail sector expects their use of consultants to shrink in 2014 — with half expecting their expenditure, which grew in 2013, to stay at broadly the same level, and half think it will grow further. The report says that two factors account for this buoyancy. First, interest in business transformation and productivity is high to exploit the opportunities and mitigate the threats entailed in the shift to online expenditure and multi-channel retailing. Second, a similar proportion of people say that taking advantage of new technology, including digitisation and mobile, will absorb time and effort this year.

Commenting on the demand in the retail sector, Edward Haigh said, "The focus on transformation, digitisation and globalisation doesn't mean that retailers aren't interested in keeping their costs low. They're actually considerably more interested in productivity gains than other sectors. But they're still more likely than average to rely on consulting input, despite the high costs — especially where regulation and looking at new opportunities for growth are concerned."

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