London: A new report released today by specialist consulting industry research group Source Information Services (Source) forecasts that global financial services consulting will grow by between five and ten percent over the next twelve months — as improving economic conditions in the West and continued high levels of growth in many emerging markets contribute to the sense that the worst is over for consulting in the sector.
In its report, Source says it has used a number of measures to forecast future expenditure including the extent to which clients expect their consulting expenditure to change between 2012 and 2013. Viewed as a weighted average across all consulting services, a greater proportion of clients (46 percent) in financial services say that their expenditure is likely to increase than say it will decrease (22 percent).
Source also found that a larger proportion of clients in financial services say their organisation has an official view that greater spend on consulting firms is acceptable than in other sectors. But, the sector is also more likely to have an official edict (19 percent compared to 14 percent elsewhere) that consulting spend should be reduced.
Edward Haigh, a director of Source and an author of the report commented, "We feel that prospects remain reasonably strong in the global financial services sector, principally because the highest levels of growth are expected in the biggest geographic markets — the US, the UK and GSA — and in some of the biggest consulting services — technology and operational improvement. However, there are still trouble spots in Western Europe; most notably Southern Europe, France and Benelux. These combine to weigh on the sector's prospects when viewed globally."
Technology is the service likely to be in greatest demand — with over half (54 percent) of clients saying that they expect an increase in technology consulting spend, and more than a quarter expect this increase to be double-digit. Operational improvement also looks set to do well: a little short of half of clients said that they thought they'd increase spend in this area, compared with 20 percent who said they thought spend would fall.
Source found that at the other end of the scale is marketing and sales consulting, which has been one of the strongest growth areas across the entire consulting market in recent years. Nevertheless, the picture here is still positive on balance with 42 percent of clients likely to increase spend, in contrast to 24 percent that said it was likely to decrease.
What would make you buy more consulting?
After the top response of lower fees, clients said that a willingness to tie fees to results would make them buy more consulting, with almost half (44 percent) of client citing this as the second most important influencing factor. The report found that the next influencing factor is more transparent pricing — an area that matters more in the financial services sector than it does elsewhere.
The role of thought leadership
Almost all (87 per cent) of financial services clients agreed or strongly agreed that they like to find out about new management ideas, with over three quarters (79 percent) saying they'll forward interesting material on to colleagues and friends.