| | By Stephen Humphreys
Last quarter I began
by talking about growth.
In January, the
country’s GDP was
falling but more
recently the Office for
National Statistics has
shown that the fall was
smaller than initially
thought. George Osborne
has delivered a “budget
for growth”. I am
optimistic for the next
set of figures. A bit
closer to home, January
saw a 1.3% growth in
service sector output,
with “business services”
posting a 1.4% growth.
Following on from the
strong figures that the
Big Four delivered
(reported in the last
edition), Accenture has
had an equally strong
start to the year. Its
consultancy practice is
20% up on last year. And
the Management
Consultancy Group, which
owns Kurt Salmon and
Alexander Proudfoot has
seen an 88% increase in
operating profits.
KPMG & Hitachi have
made sizeable
acquisitions in the
outsourcing space: KPMG
with the purchase of
Equa Terra, and Hitachi
Consulting with 2,400
offshore employees in
Sierra Atlantic. As part
of the restructuring at
LECG, FTI Consulting has
taken over the majority
of its UK offerings. I
also hear murmurs across
the market that other
acquisitions are
expected.
In line with the KPMG
and Hitachi
acquisitions, a number
of large outsourcing
deals have been declared
which will require
significant consultancy
support. Efficio has won
a five year procurement
outsourcing deal with
Thames Water, while
Atos, Accenture and
Capgemini have signed
significant IT
outsourcing deals with
Siemens, the Ministry of
Justice (MoJ) and BAA
respectively.
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The Accenture deal is
particularly noteworthy:
the Ministry of Justice
will pay Accenture £22m
over five years. This is
a significant
development in the
current public sector
spending climate. There
are rumours that a
similar deal might be
seen at the Department
of Work and Pensions as
well. Elsewhere in the
public sector, readers
of our regular column
will have already learnt
about the growing
pockets of work in
education and
healthcare. McKinsey,
PwC, Tribal and Niche
Health & Social Care
Consulting all report
that initial work on
business cases and
feasibility studies have
been carried out with GP
consortia. In education,
Mouchel is working on
the developing academies
projects, with the
schools equivalent of GP
consortia. Capita
Consulting, Tribal and
The Parthenon Group have
been investing in their
higher and further
education practices.
Universities and
colleges have been
seeking significant
support as they adapt to
the new fee models.
Critically for the
larger consultancies
that operate in the
public sector, Buying
Solutions has announced
a one year extension to
the multi-disciplinary
consultancy framework.
This means that
companies such as the
Big Four and McKinsey
can continue to bid for
tendered government
contracts.
Elsewhere in the
consultancy industry,
Paul Winter, of strategy
consultancy Corpra, has
been announced as the
new president of the
MCA. And the MCA Awards
have been unveiled.
Management consultancy
firms performed very
well in the Sunday
Times Best Place to
Work 2011 with six firms
featuring in the top 25
of the large companies | |
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| | accountant Arthur
Andersen did after
Enron,” said Edward
Helmore of
thisismoney.co.uk. I am
fascinated to see how
this case develops, and
to see how it impacts
upon the industry;
another “watch-and-wait”
scenario.
Growth
markets?
In terms of growth,
the market is similar to
that of earlier in the
year. Financial services
is enjoying continued
strong growth. This is
followed up by all
commercial service
lines;
telecommunications &
media, energy &
utilities,
pharmaceutical & life
sciences and retail &
consumer goods are all
strong. In the service
lines, we are seeing the
most growth in
procurement, supply
chain and logistics in
the commercial sectors
and risk, regulation and
broader operational
consulting in financial
services. We also have a
better idea of what
public sector consulting
will look like going
forwards; continued
reduction from central
governments, but growth
is coming from the
devolved areas of power;
GPs, local governments,
school ‘consortia’ and
higher and further
education.
These observations
have all been echoed in
Top-Consultant.com’s
Annual Recruitment
Channel Report, which
examines forecasted
growth areas for the
next year. You can read
that full
recruitment report
here.
We were pleased to
have performed so well
in the awards associated
with the report. We were
runners up in the best
recruiter category, and
Rachel Snelgar received
an award for outstanding
candidate feedback.
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Hiring
trends
Top-Consultant.com’s
Recruitment Channel
Report also highlights
the significant increase
in expected attrition
rates for the next 12
months. This, it
believes, is driven by
consultants who have not
seen pay rises in three
years, who rightly
realise that the only
sure way to get one is
to move. The report
predicts that
consultancy companies
will need to hire 23% of
current head count in
order to tackle
attrition and meet
growth targets.
News regarding the
immigration cap remains
important. As previously
discussed the Tier 1 cap
sits at 1,000 per year
and the post-study work
visa is to be changed
significantly. This will
have a big impact for
consultancies hiring the
top international
candidates that study
for an MBA in the UK.
This, along with the
increasing demand for EU
language skills, creates
significant
opportunities for
EU-based operational
improvement and IT
consultants
particularly.
The number of senior
hires being made is on
the rise: Capco has
taken on a number of new
partners; Greenwich
Consulting has taken a
PwC partner, and Hitachi
Consulting has named a
new UK head who comes
from Capgemini, for
example. This is very
good news for the wider
recruitment market
within consulting, as
new senior hires
invariably require the
“pyramid” beneath them.
This remains an
exciting time to move
into consultancy!
Until the next
quarter, enjoy the
market! | |
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| | category. In the small
companies category, our
congratulations go to
Qedis and Baringa
Partners.
Alongside all this
good news, consultancy
firms are still
operating in a
marketplace that is
healing. Although
consultancy hiring is
very much on the up,
this isn’t the case
everywhere. As such,
firms are being much
more innovative in their
fee models. Performance
related pay is very much
on client organisations’
agendas. In the private
sector this is
particularly in the
realm of procurement and
cost-saving projects,
where savings generated
are easy to see,
calculate and therefore
bill on. The public
sector has traditionally
been keen on these
models, but is less
clear on how to
implement them;
something of a
“watch-and-wait” in the
market.
Shaking the industry
is the Raj Rajaratnam
insider trading trial in
New York. Jurors have
heard secretly-taped
telephone conversations
between Rajaratnam, who
faces 14 counts of
fraud, and high-level
McKinsey executives who
supplied the billionaire
founder of the Galleon
hedge fund with illegal
tips about McKinsey
clients. It doesn’t look
good, especially when
much of a consultancy’s
reputation is built on
it being able to keep
boardroom
confidentiality.
“How much damage the
McKinsey brand has
suffered is hard to
gauge. Analysts warn
that if corruption is
believed to be systemic,
the worst case scenario
could see McKinsey
collapse as the | |
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