Management consultancy sector responds quickly to recession
The management consulting industry has changed the balance of its work dramatically in the last year, according to authoritative analysis from the Management Consultancies Association, the industry’s trade association. Consultancies adapted quickly as recession hit the British economy in the 3rd and 4th quarters of 2008 and the needs of their clients changed.
A positive force for the economy is the latest report from the MCA. It shows significant differences between 2007 and 2008 in the type of work being carried out by consultancies. There was a substantial rise during 2008 in the use of consultants by UK companies to increase productivity, raise performance and reduce costs.
In particular, spending on business process re-engineering was up by 31%, and by 19% on operations consulting. While IT consulting and programme/project management remain the largest services, even there the focus has shifted significantly towards work that helps clients adjust to the demands of a shrinking economy and a tougher economic climate.
Alan Leaman, chief executive of the MCA, commented: “The downturn hit fast and furious in the second half of 2008. Management consultancies adapted quickly by focusing intensely on the
new needs of their clients. The consulting industry is helping business through the pain of this recession, and also equipping companies to prosper once the recovery comes.”
UK based consulting firms increasingly win business abroad
The MCA estimates that management consultancy contributed £914m in exports to the UK in 2008. The government-sponsored Professional Services Global Competitiveness Report recently stated that “UK management consultancy is a world leader”. This is reflected in demand for British consultants around the globe, with particularly strong growth in the Middle East and significant opportunities in Asia.
Leaman said: “The reputation of UK-based consulting firms is on the rise around the world as overseas organisations increasingly recognise the depth of knowledge, skills and experience within the sector.”
UK consulting still growing but at a slower rate
The UK consulting industry continued to grow overall in 2008, though at a much reduced rate compared with recent years: 5% growth in the past year compares with 10% in 2007 and a peak of 27% in 2005. The MCA estimates that the total industry in the UK is now worth around £9bn and
employs more than 55,000 people.
Other findings in the MCA report include:
• Financial services and manufacturing both saw falls in spending on consulting in 2008, down 6% and 3% respectively;
• The sectors with the largest growth in consultancy spend were resources/energy and construction/transportatio n, both recording 8% growth;
• Environmental consultancy continues to show significant growth, up 31% to £77m;
• There has been some further growth in employment in the industry during 2008 as consultancies fight to win and retain business through the quality of their staff;
Leaman concluded: “Management consultancy is certainly not immune from the recession and we know that 2009 will be an exceptionally tough year for the industry. But this data also shows how resilient it is, and how quick firms have been to spot what their clients need in the downturn. The value of working with expert and independent outsiders is, if anything, even greater in these difficult times.”