London: Growth in the UK management consulting sector (1) during 2012 and 2013 has rapidly outpaced the wider economy — as companies turn to consultants to help them recover and boost growth.
A report published today by the Management Consultancies Association (MCA) Think Tank, show that levels of optimism have also surged over the past twelve months with almost two thirds of management consulting firms broadly optimistic about the economy, the health of consulting, and prospects for the future. The Think Tank says that whilst the consulting sector has helped financial services restructure, and adapt to new regulations, it has also diversified into manufacturing, infrastructure and digital; supporting key pillars of growth and helping "rebalance" the economy.
The Digital economy is on the march but skills are short in supply
The digital economy in particular is identified as driving work for consultants because digital dynamics are creating the momentum to make changes urgently — and relatively cheaply. Whilst this is fuelling growth well beyond the manufacturers of the latest gadgetry, many consulting firms are reporting that there is a skills shortage with too few graduates able to programme and write code, impacting both Digital industries and Digital consultancies.
Alan Leaman, CEO of the MCA said, "Growth now looks set to continue. Interviewees report strong order books and pipeline growth. Of course, there are still significant issues. One interviewee observed that it is taking longer for some clients to authorise projects than before 2008, with CFOs and other internal governance actors heavily involved in sign off."
The importance of ConsultancyOne as the public sector turns to consultants
MCA member data is also showing that demand for consultants in the public sector is starting to rise, following severe contractions in recent years. The report says that no one should be surprised by this rise. British commerce, industry and the financial sectors, with their array of highly paid talent, find that in times of change they need consulting expertise; and the public sector needs this expertise too.
However, one of the concerns raised by the report is that there is currently limited evidence that ConsultancyONE, the government's new buying framework, is being used for some of its stated purposes. For instance, relatively few niche, emergent and specialist consultancies have succeeded in securing work through the framework, and relatively few contracts have been let using imaginative risk and reward contract models.
Leaman comments, "The MCA has contributed to the development of the ConsultancyOne buying framework. It is vital that it starts to gain momentum — both to ensure best practice, but also so government gains access to a wider range of skills and expertise from specialist consulting firms."
Despite the teething problems with ConsultancyOne, consultants are providing programme and project management expertise on major change programmes in education, health, welfare, energy, infrastructure, communications, and ICT. The MCA expects the public sector will continue to need their core skills supplemented by consulting support. For instance, complex infrastructure programmes will need integrators, programme management and assurance to keep them on track, contain costs, and maximise the concerted efforts of the multiple parties.
Responding to a skills shortage in the sector
With the demand for labour rising again, a skills shortage is impacting both UK businesses and the consulting sector. The report found that the consulting industry is responding to the skill shortage in a variety of ways. A number of firms have developed apprenticeships, the MCA are working with BIS on apprenticeships in the professional services arena, and many firms have recruited successfully as part of major expansion programmes. MCA member firms have also invested heavily in the talent that they have already got.
David Freeman, Huthwaite International, an MCA member, said: "We've invested lots of time and money training our consultants. They're precious assets with lots of knowledge and wisdom in their heads. So we let none of them go during the recession."