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UK consulting grows at its fastest rate for six years, says MCA

Alan Leaman, MCA

London: Data released today by the MCA (Management Consultancies Association) shows that the UK management consulting sector (1) grew by 8 per cent in 2013 to £4.8bn, the fastest rate of growth since 2007 (2) . Recruitment has also surged — up 16 per cent to 35,000 consultants across MCA member firms.

Digital explosion drives consulting service line growth

The MCA annual data, an authoritative account of the performance of the consulting industry in the UK, also found that the rapidly growing Digital & Technology service line now accounts for a quarter of consulting revenues. Its market share rose by around 6 per cent in 2013, and the degree to which firms are investing in this new area is illustrated by a staggering 115 per cent rise to 8,000 digital management consultants — as a result of both recruitment and redeployment.

Financial services continues to contribute the largest share of MCA members' fee income from the private sector (representing a 35 per cent share), but the three sectors that grew most rapidly in 2013 were Construction and Transport (up 60 per cent), Services (up 21 per cent), and Telecoms, High Tech and Media (up 18 per cent). The sharp rise in Construction and Transport is mainly as a result of consultants providing expert advice on how the National Infrastructure Plan can channel investment into a targeted body of major projects.

Paul Connolly, Director of the MCA Think Tank, and author of the report, said, "Strong growth in Digital and Technology highlights how the consulting industry is central to the emergence of Digital as a major force in the UK economy. Many businesses are facing a range of Digital opportunities, and consultants are providing them with the expert knowledge they need to capitalise on them.

"UK consulting's performance in 2013 is also an advance indicator for the prospects and health of the wider economy. Businesses are seeking consulting support to develop growth propositions: so consulting is growing by helping others grow."

Leading the companies and the economy back to growth

The MCA Insight Data revealed that UK consulting was not only well ahead of trend growth for the rest of the economy, but it also compares well with other service and professional sectors. Of the service sector, only retail, administrative and information services appeared to have grown faster than consulting in 2013, while professional services growth in general was slightly lower.

Modest recovery continues in the public sector

After the retrenchment in public services expenditure in the immediate aftermath of 2008, and more acutely again after 2010, public sector consulting in 2013 continued the modest recovery of 2012 (5 per cent), with revenue growth of around 3 per cent. However, these small rises still do not take consulting spend to anything close to the high points in the last decade. In real terms, public sector spend on consulting amounts to around half what it was before the downturn.

There were significant contractions in Central Government and Executive Agency spend, while there was 6 per cent rise in NHS spend, and more substantial rises in Defence and Local Government consulting. The report found that as local authorities have been hit by massive contractions in their budgets, MCA member firms have developed value propositions that help cash-strapped authorities save money through more effective targeting, prioritisation and segmentation of customers, or through proposals in which consultants share the risks and rewards.

Alan Leaman, CEO of the MCA, added, "The small rise in public sector consulting is entirely understandable and welcome as it stems from real needs. MCA members would welcome even more of a proper dialogue with the public sector on how this need and its growth can be properly managed.

"We have established the Consultancy Buyers Forum which aims to promote excellent practice in consulting procurement across public and private sectors. MCA members wish to be purchased to secure value, and they follow through on that by taking the necessary measures to promote effective practice."

Big Four consulting

The Big Four accounting firms share of the MCA member firm revenues increased a little from last year to 44 per cent. Consulting staff numbers among the Big Four rose by around a fifth (22 per cent).

The future

The report states that with consulting having outperformed the wider economy in 2013, 2014 also promises to be a good year for the industry, potentially an even better one. Already many MCA members are recording full order books and strong prospects, and although there are many factors that can influence growth performance this year, if trend growth continues, the MCA forecasts double digit growth in 2014.

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