| | By Stephen Humphreys
Well, there are good
signs from the grass
roots; the economy is
growing faster than
expected (at a
blistering 0.8%!) and
business insolvencies
have dropped by 17%.
Financial services (FS),
the powerhouse of the UK
economy, are still quite
volatile, though. One
week I hear of
inordinately high
figures from the banks
and the next week
someone else is making a
host of redundancies.
RBS is back in the red
but the bonus pot sounds
like it will be
significant this year.
Elsewhere, there is a
general consensus that
house prices will fall
during the first half of
2011 and an estimation
that unemployment will
increase to a 17-year
high of 2.7 million.
The ‘Big 4’ continue
their onward march and
look strong heading into
2011. KPMG reported
global advisory revenues
of $6.07bn, a 5.5%
growth, with the
majority of this growth
coming from their
performance and
technology division (17%
growth in Europe), the
conventional management
consultancy unit of the
firm. In December KPMG
also announced a hiring
drive in their Risk &
Compliance practice. PwC
have rebranded, dropping
the
PricewaterhouseCoopers
and revealing a new
logo. Comment as you
like about the new
brand, but Kennedy
Information, the
research firm, have
again ranked PwC number
one globally for
financial consulting,
with a 13.7% market
share. The ‘Big 4’ are
all hiring,
predominantly in
strategy and financial
services, and PwC has
seen a 118% growth in
graduate applications;
in fact, graduate hiring
across the Big 4 is up.
The rebranding streak
continues elsewhere, as
does the growth.
Capgemini has launched a
new slogan “people
matter, results count”.
Accenture has seen
revenues of $3.57
billion of the last
quarter in their global
consulting division, a
growth of 14%.
The public sector is
something of a phoenix
in utero. The
Twittosphere was alive
around spending review
time, as we all waited
with bated breath to
hear what had gone and
what hadn’t. I think it
was best summarised
thus:
“#fairness #reform
#growth
#spendingreview”
Efficiency drives
abound and questions
have repeatedly been
asked about how on earth
the public sector
expects to make those
kind of cuts without the
use of consultancies.
Although the age old
confusion between
interim management and | |
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| | management consultancy
continues, the National
Audit Office (NAO) has
said that consultancy
“can provide great
benefit” to the
government’s coffers and
help increase
productivity. They went
on to say that the
coalition’s attitude to
consultancies since the
election “cannot be an
effective ongoing
approach to managing
spending.” Sir Gus
O’Donnell, Cabinet
Secretary and Head of
the Home Civil Service,
has also come out in
support of the use of
consultants when he said
that “it's important to
buy in skills for jobs
with a particular start
and finish date. The
right use is if it fits
is where there's a
skills gap and we are
buying in some
experience from
outside.” This was all
further vindicated by
the Public Accounts
Committee report,
published just before
Christmas.
All the big IT
consultancies have
signed memoranda of
understanding with the
Cabinet Office; Atos
Origin has been awarded
a business process
outsourcing (BPO) deal
with the Department for
Work & Pensions (DWP),
and Capita has been
handed a contract
extension for Service
Birmingham, worth £300m.
Local governments have
been given more freedom
on their spending
decisions; this is an
area that all public
sector consultancies
would be foolish to
miss.
Health is also
buoyant. It can only be
a matter of time before
central government open
up. In fact, I have even
been hearing rumours of
growth in defence—a
consultancy sector that
has been in the doldrums
since even before the
election.
Recent conversations
with a number of
boutique consultancies
reveal a shift in some
client behaviours. There
seems to be a move to
utilising specialists;
the strategy house does
the initial piece, the
operational improver
looks at the processes,
the change management
firm look after people,
and the IT firm change
the solution platforms.
Although we are still
unclear as to what the
drivers are for this
(cost; flexibility of
smaller firms; genuine
search for the
specialist?), it is
giving real traction to
boutique consultancies,
be they sector or
skill-set specialists.
The bulk of our work
load is currently coming
from these boutiques and
mid-tier firms and I
expect to see a
continued rise in their
importance.
Growth markets?
Financial services
remain strong and are
certainly seeing the
most hiring activity, as | |
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| | well as growth in the
number of new
engagements. Capco, the
UK FS consulting
business, has been
purchased by a US IT
firm, showing the
confidence that foreign
players have in the UK
FS consulting market.
Energy & utilities,
retail & consumer goods
and telecommunications
are all also strong, as
readers of my regular
column will know. Large
industry variations, new
nuclear power plants,
increased investment in
renewable energy, the
move to emerging markets
to evade the slump in
Western economies, and
increased regulation all
herald a growth in UK
consulting for 2011.
One area in
consulting that I will
be watching keenly is
sustainability. A number
of the consulting
powerhouses have
developed an offering
here over the last few
years, particularly
Accenture, PwC and
Logica. They have grown
quietly and are now
making a lot more noise.
Increased regulation, as
well as the growing
realisation that going
green makes sound
business sense, means
that I expect
significant growth in
this sector through
2011. This is echoed by
the Forrester report
into the opportunity
presented to consultancy
firms by the
sustainability agenda.
Hiring Trends
The big news in
consultancy recruitment
over the last month or
so has been the
immigration cap.
Although the MBA route
remains open, with the
continued reluctance of
firms to sponsor visas,
the number of highly
skilled migrants that
will be able to find
roles in UK consulting
will be reduced
significantly. This,
along with the
increasing demand for EU
language skills, creates
significant opportunity
for EU-based operational
improvement and IT
consultants
particularly.
Pay is on the rise,
as are counter-offers.
Moving jobs remains the
only way to secure a
significant pay
increase, and in a
couple of weeks, when
all the bonuses are
safely in place,
consulting staff
turnover rates are sure
to increase. At the very
top end of the academic
spectrum, the war for
talent is intensifying;
this is creating an
exponential upward curve
in salaries for those
particularly desirable
candidates.
This is an exciting
time to move into
consultancy and right
now it really is a move
I would recommend.
Until the next
quarter, enjoy the
market! | |
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