| | By Mick James
With signs that the
economy is cooling, the
UK consultancy industry
is at a crossroads. Are
we coming to the end of
the most recent growth
curve, or is the
industry going to
continue to blossom?
From a low point in
2002, the UK consultancy
industry has gone from
strength to strength.
Last year’s bumper
figures from the
Management Consultancies
Association showed
member revenues
increasing by 25%. This
was always going to be a
hard act to follow and,
although growth for the
most recent quarter has
dropped to 11.8%, this
is still a growth rate
many established
industries would kill
for. Indeed,
consultancy has a long
record of outpacing the
economy – recent figures
from the Office of
National Statistics
showed that, while the
overall economy has
grown by 91% over the
last 15 years,
consultancy has
increased its
contribution by 266%.
The industry’s recent
growth spurt came after
the whole industry
pretty much went under
the plough in the early
years of the century.
The economy was bettered | |
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| | offered by larger firms.
This is not to say
that the big firms have
lost out, indeed they
too have grown, not just
winning private sector
transformation projects
but benefiting from the
twin booms in
outsourcing and public
sector work.
Outsourcing has gone
mainstream and is no
longer seen as merely a
cost-cutting option.
Global companies
regularly outsource, not
just looking for lower
cost or greater
efficiency but looking
for new capabilities to
support their deepest
strategic goals.
Offshoring options have
expanded beyond in India
to include “near-shore”
locations such as
Eastern Europe. As an
English-speaking country
with ties to both the
sub-continent and the
EU, the UK has been in a
unique position to
benefit from this trend.
Nor has the flow been
one-way: as the
consulting industry has
built up its Indian
presence, so Indian
firms such as Tata,
Wipro and Infosys are
rapidly building up
their own consulting
capability in the UK –
the ideal springboard to
the rest of Europe and
even the US.
Meanwhile, under New | |
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| | Labour the consultancy
industry has been called
on to support the most
wide-reaching
transformation of the
country’s public
services ever
undertaken, from
groundbreaking schemes
like the London
congestion charge to
Connecting for Health,
the country’s biggest
ever IT project.
All this activity by
itself would have
created a massive skills
shortage, but we have
also seen companies like
BT and Serco ramping up
or establishing
consultancy arms.
Finally, we are now back
in a situation where
it’s once more possible
to pursue a consultancy
career with any of the
“Big Four” accountancy
firms. In fact, all
these firms retained
some consultancy
capacity, under labels
like “Business Growth
Advisory Services”. Now
that the non-compete
agreements have expired,
the “Big Four” are back
in a big way, adding to
the recruitment
pressures, particularly
at senior levels.
Not that they want to
recreate their former
selves. Rather they are
distancing themselves
from the world of IT and
outsourcing and
positioning themselves | |
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| | as “client side
advisory” players who
can work with companies
in their dealings with
the big IT firms. This
has coincided rather
neatly with a “back to
basics” attitude among
clients, who are looking
for consultants to play
a more traditional role
in their organisation:
cutting costs, enabling
growth, bringing
innovative thinking and
managing change.
So a slight downturn
in growth may offer
something of a breather
for the industry and
it’s arguable that
recruitment problems
themselves have acted as
a brake on growth.
We’ve probably already
reached the high water
mark of public sector
work, with only ID cards
to come. The UK’s
imminent “regime change”
adds an extra note of
caution. One of the
biggest challenges the
industry will face in
coming years is
translating the
resources it has built
up from public sector
work into the corporate
sector. In the
meantime, opportunities
still abound, for
consultants, would-be
consultants and their
clients, who now have an
unprecedented range of
options to choose from.
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| | by the dotcom boom and
9/11, while consultancy
was hit by more local
issues such as the
post-Y2K slump in IT
spending and the
post-Enron collapse of
Arthur Andersen. With
widespread redundancies
and three of the
remaining Big Four
accountancy firms
selling off their
consultancy arms, many
consultants found
themselves either on the
beach, working for the
wrong firm, or with
promotion prospects
stalled.
But from this bleak
landscape came a
remarkable flowering,
particularly at the
lower end of the
industry. Frustrated
consultants showed
notable creativity and
drive in forming new,
niche consultancies and
quickly building
impressive client
bases.
Offering high-quality
to blue chip clients,
these firms have grown
rapidly, matching or
exceeding the rewards
and career prospects | |
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