International work carried out by UK-based management consultancies has more than tripled in size since 2011, finds the latest Half Yearly Report, published today by the Management Consultancies Association (MCA).
- Stability in domestic consulting work combined with a leap in international work leads to a continued rise in employment.
- Financial services market still strong, but environmental consulting sees marked decline
The report, Consulting in a Climate of Uncertainty, found that MCA member firms reported almost a fifth (17 per cent) of their work now comes from international markets compared to just 5 per cent last year. The Eurozone and Middle East are where most firms anticipate more growth in 2012 and next year.
Alan Leaman, CEO at the MCA — which entertained consulting bodies from around the world in London last week — said, "UK consulting firms are at the centre of developments in the digital economy — advising organisations across the globe on how to capitalise on innovations such as cloud computing and so-called big data. Firms are also particularly seeing a demand for cyber security and regulatory compliance work."
Despite the challenging economic backdrop in the UK, fee income continued to grow — up 5 per cent in the first half of 2012 on the previous year, and 94 per cent of firms said that they are anticipating further growth. Sectors earmarked for strong growth include resources and energy, telecoms and the services sector.
The combination of growth both domestically and internationally has also led to a continued rise in employment, with almost two thirds (61 per cent) of firms expecting their number of consultants to grow in 2012. This is the third year in a row that firms have grown their talent base, a positive sign of investment in the consulting industry.
Leaman added, "With a slower pace in the UK markets, there is a real drive for exporting UK consultancy. We've seen a major rise in the amount of work UK consultancy firms are looking for overseas; whether this is small firms growing their business, or international firms turning to their UK based consultants as they have the skills that are in demand across the world."
The report also found that financial services, which saw strong growth in 2010 and 2011, is still seen as a potential growth area for consulting in 2012, though not as strongly as in recent years. There are still many challenges for Financial Services firms but the pace of change has slowed while banks wait for clarity on legislation from the UK and EU.
In contrast, the decline in public sector work has slowed, but the report says that a lack of progress on the Government Procurement Service's ConsultancyOne framework is adding to difficult market conditions, and particularly hurting SMEs. The report also found that the growth in manufacturing work has slowed after a stronger 2011.
Recession has impact on environmental consulting
The recession has led to a marked decline in environmental consulting. While some firms still use their environmental credentials as a differentiator, the market hasn't shown real growth throughout the recession.
Consultants adapt well to changing client requirements
The report also found that consultancies have adapted quickly to changing client buying habits, including longer bidding processes and a shorter horizon for projects. The general economic uncertainty and the Olympics led to many firms observing that clients were reluctant to forward plan and commit to big projects in the first half of the year. Where there are large projects on the horizon, clients are quite often cutting them into segments to go onto the market, offering smaller shorter projects where in the past there would have been one large one.
"International work is increasingly becoming a big part of what we do. Over the past six months we have seen increased demand for our services, particularly in the health and power & utilities sectors, in the Middle East as well as the European Union — France and Germany in particular.
"In a globalised environment work overseas is driven both by existing UK clients and the acquisition of new ones looking for firms that can mobilise people quickly and allocate them at the right place at the right time."