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| | characteristic of the UK
economy that even as
late as August no
recovery is ever quite
firmly established
enough, nor any collapse
yet underway. Depending
on how you look at it,
we could all be about to
plunge over a cliff as
house prices crash,
retail sales collapse
and Gordon Brown
disappears into a fiscal
black hole. We could
equally have built a
firm foundation for
runaway growth in 2006,
or be heading for one of
those fabled
“soft-landings”.
Rather than try to
predict the effects of
the economy on
consultancy. Perhaps its
perhaps more instructive
to look at consultancy
as a bellwether of the
future performance of
the economy—in which
case there seems to be
at least grounds for
mild optimism.
For a start, if you
still believe that
there’s a business wind
that blows from West to
East across the
Atlantic, then European
consulting firms are
only at the start of a
revival that’s well
established in the | |
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| | States. Last year the US
sector returned to
overall growth, while a
mixed bag of up-and-down
European results pretty
much averaged each other
out. This year it’s
Europe’s turn, with
Accenture not only
showing record revenues
for the quarter ending
in May, but also growth
in the EMEA region
which, at 17 per cent,
outpaces the rest of the
firm.
However, Accenture
has often shown itself
capable of both
outperforming the sector
and bucking a negative
trend, so it’s
worthwhile to look at
the performance of
players whose recent
history has not perhaps
been so rosy. We’ve been
looking quite closely at
Capgemini for some time
now, and noting the
continuing improvement
in the fortunes of a
firm that was all too
recently seen as a total
disaster area. In its
latest set of results
the firm returned to
profit and suggested
that growth would
continue at a
respectable 10 per cent
throughout the year.
Other firms that have | |
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| | either restructured or
refocused themselves are
also reaping the
benefit: Xansa’s
continued expansion in
India and decision to
focus on the European
market has been repaid
with a boost in profits
of nearly 30 per cent.
Atos is another
refreshed brand, having
created a clear
consultancy offering out
of its many
acquisitions, improving
margins. With original
parent Phillips finally
disposing of its last
stake in the group, Atos
is looking forward to
strong organic growth
throughout the rest of
the year.
Another encouraging
sign for the sector has
been the very positive
results achieved by
either completely new
entrants or players from
other sectors making a
push into the sector.
Take BT for example—for
a long time its
consultancy, IT and
other service offerings
were overshadowed by the
group’s massive
telecommunications
legacy. Now, with
traditional revenues in
decline, these so called
“new wave” services are | |
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| | the key to BT’s recent
rise in profitability.
Whether you look to
“second-tier”
accountancy firms like
RSM Robson Rhodes,
Indian outsourcing
giants like Tata or
facilities management
firms like Serco, anyone
who dips a toe in the
European consultancy
waters seems to find
them very inviting. Even
much smaller start-ups
are facing the welcome
dilemmas of growth: how
to recruit fast enough
to service new clients?
When to take on more
fixed costs?
All these signs are
not so much “green
shoots” as signs of an
underlying confidence
and dynamism among
clients which is much
stronger than short-term
blips in retail
confidence or terrorism
inspired jitters. From
our viewpoint, the
message would be to
enjoy whatever free time
you can in August,
because there’s going to
be an awful lot of work
waiting for you when you
get back in September!
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| | By Mick James
Contrary to anything
T.S. Eliot might tell
you, August is the
cruellest month, and has
been for a long time. In
the Middle Ages, it was
often a time of famine
as peasants ran through
the last of their stocks
of food before the
harvest came in. In
consultancy it’s a time
of similar anxiety, as
firms wonder whether the
economic trends they’ve
witnessed in the first
half of the year will
continue into the
autumn. Despite the fact
that, at least in the UK
people try to avoid the
crowds, inflated prices
and high temperatures of
August when planning
holidays, enough of us
still disappear to put
any project involving
the approval or
cooperation of more than
three people on hold.
It wouldn’t be so bad
if there were stronger
signals from the economy
as a whole, but it’s a | |
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