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UK consulting set for 5 per cent growth in 2013, says MCA

Alan Leaman, MCA

London: Consulting in the UK is set for 5 per cent growth in fee income in 2013, according to the Management Consultancies Association, MCA.

A new MCA report published today, Consulting in 2013, has found that despite the turbulent economic outlook, opportunities are still being created for management consultancy. The report, which features research amongst MCA members and consultancy buyers, estimates a 5 per cent growth in industry fee income in 2013.

The report also reveals that fewer consulting firms are expecting high levels of growth in 2013 than in 2012. Whilst over three quarters (77 per cent) of firms are expecting to show some growth in the year ahead, the large dip in business confidence in quarter three of 2012 will have a major impact on business planning for 2013 and the pipeline of projects for consulting firms.

International growth remains important

The MCA says that Africa, the Middle East and Latin America offer the most interesting opportunities for international expansion for UK management consultancy. For instance, Africa's adoption of new technology over more traditional desktop and wired internet gives companies who can develop mobile based solutions a real advantage in the market.

IT remains strong

The MCA's report also references its Research Now Consultancy Buyer's Survey, which showed that buying IT solutions outranked any other reason to buy consultancy. This is reflected in the MCA industry data, and this trend is set to continue as business and IT become more and more intertwined.

Alan Leaman, CEO of the MCA said, "The pace of technological innovation will continue to drive business change and the need for management consultancy. As technology becomes an integral part of business it will be as much a part of business process change, strategy and marketing service lines. The areas of consultancy that may not have previously been IT heavy will require consultants to gain new skills.

"The challenging economic climate in the UK will mean that international work will continue to play a key role in providing growth, with opportunities in Africa and the Middle East being attractive markets for many consultancies."

Market Sectors — Public Sector and Financial Services

MCA data suggests that the rapid decline in public sector work over the last two years has slowed, but that growth has yet to return. Key areas outside of central government, such as health and local government, are in a period of massive process and operational change, and could be future growth sectors for the consulting industry.

Financial services remains a predicted area of continued strength for consulting. Banks are still grappling with Basel III, the current financial services bill, and the regulatory changes driven by the FSA. Banks and insurance companies are also working to improve their relationships with and service to customers. And these problems are frequently global, so UK consultancies are able to take their expertise from the UK's financial services industry and apply the lessons learnt abroad.

Large and small prosper

The last four years in consultancy have seen a continued domination of the market by large firms with their market share increasing — with around 80 per cent of fee income being generated through the largest 10 per cent of firms. At the same time, the SME market is showing resilience, with many SMEs growing their staff base, and winning new clients and contracts. The report says that firms that specialise in particular market sectors have seen real success in the last two years.

But the MCA says that clients must work more effectively to hold down the costs of bidding for consulting firms, particularly SMEs. Alan Leaman commented, "The cost of bidding to be part of the ConsultancyONE public sector framework has been felt by many smaller firms. We need big changes to open up this market to all quality firms, whatever their size."

To purchase a copy of the MCA report, Consulting in 2013, go here.

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