London: The UK management consulting industry's fee income grew by just under 5% in 2011 and the total number of fee earning consultants increased by 10%, according to a report to be published later this week by the Management Consultancies Association (MCA). The MCA estimates that the industry is now worth nearly £9 billion.
The report argues that spending on consultancy services is an advance indicator of an incipient though slow economic recovery.
According to the MCA UK Consulting Industry Statistics 2012 Report, 2011 was a year of consolidation and growth for consultancy, with the UK industry moving back to aggregate fee income levels last seen in the immediate pre-crisis period.
Alan Leaman, Chief Executive of the MCA, said, "The UK consulting industry is both resilient and agile. It looks likely that the increased spending on consultancy services in 2011 by the private sector was an early sign of some improvement in wider economic prospects.
"While most private sector clients are not confident enough to undertake major projects, they are often developing their capacities, processes and systems so that they are ready for an upturn when it materialises."
Private sector drives fee income growth
2011 growth was driven by an increase in fee income from the private sector — running at a healthy 14%. This eclipsed the 12% growth recorded in 2010. As a result, there has been a rebalancing effect on the consulting industry's activities from public to private sector. Currently the ratio is 80:20 private to public, with further private sector growth foreseen by most consulting firms.
Manufacturing sees the fastest growth in fee income in 2011, rising by 21%
The growth of consulting in manufacturing is an early indication of some rebalancing in the economy. The sector, although it remains smaller for consulting than financial services, generates 16% of total fee income. MCA analysis suggests a major push to exploit economies of scale and improve supply chains, boosting productivity and efficiency.
The total number of fee earning consultants increased by 10% in 2011. This is in stark contrast to 2010, when a 2% reduction in fee earners was recorded.
The full report will be launched formally on May 17.