| | It’s official – the UK
consulting industry is
no longer booming at the
growth rates seen in
2005 and 2006.
Growth slowed to 10%
in 2007 and is expected
to dip further in 2008;
but rather than facing a
dot-com style crash, the
industry will instead
experience a period of
subdued growth for the
next 1-2 years.
These are some of the
key findings to emerge
from the annual
consulting industry
report produced by the
Management Consultancies
Association. Entitled
The UK Consulting
Industry 2008, the
report presents data
collected from dozens of
the leading consulting
brands, plus a myriad of
smaller niche players.
As such, it’s the most
authoritative data
tracking the UK | |
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| | consulting industry.
However, in addition
to the quantitative data
assembled for this
report, senior
executives from around
80 leading consultancies
in the UK were
interviewed between
January and March 2008.
These interviews have
allowed the MCA to gauge
firms’ expectations for
the coming years – and
the picture being
painted is one of more
subdued growth, but
growth nonetheless.
The chart
(Figure 1) indicates
that firms’ expectations
(Scenario 2) are for
growth of 6-7% if the
financial markets
continue on their
current path and further
uncertainty and negative
headlines prevail. If
there are further shocks
that cause the broader
economy to lurch into a | |
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| | protracted recession,
then the consulting
industry will be
stagnant over the coming
2 years (Scenario 3).
The most positive
outlook (Scenario 1) was
being played down by the
time the report was
launched in May. This
scenario foresaw upbeat
economic news from Q2
onwards and the gloom in
the UK economy turning
out to be nothing more
than a short blip.
Since soundings were
taken of the firms,
however, the Bank of
England’s ability to
slash interest rates has
been curtailed and oil
prices have hit new
highs – meaning this
scenario cannot
realistically expect to
be achieved.
Encouragingly, the
worst of the market
conditions may already
have been weathered by | |
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| | the UK consulting
industry. In July 2007,
growth was so strong
that the firms were
foreseeing a 2007
year-end growth figure
of 20%. The fact that
the outcome has been
growth of only 10%
highlights the severity
of the slowdown that was
experienced in the
second half of 2007.
By contrast, growth
of 6-7% in the current
year would feel
reasonably buoyant – and
perhaps explains why so
many firms have
restarted their
recruitment drives in
the last months.
Looking at the
factual data for 2007,
IT consulting and
Strategy consulting were
the big winners – along
with several smaller
service lines.
(Figure 2)
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From a resourcing
perspective, it is
intriguing to see that
IT consulting headcount
grew the slowest in
2007.
(Figure 3)
So whilst hiring in
“pure” management
consulting broadly kept
pace with revenue
growth, hiring in IT
consulting (+6%) lagged
considerably behind the
growth in IT consulting
revenues (+16%).
Fiona Czerniawska of
the MCA stressed that
this could point to a
resourcing crunch in IT
consulting during 2008.
The launch of
TopITconsultant in the
last 12 months also
looks particularly well
timed against this
backdrop of a growing
war for talent in the IT
consulting space.
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