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Stephen Humphreys from Huntswood looks at the consulting market in the first quarter of 2013.
Huntswood: The state of the market – Q1 2013
 
 
   I have started this
year feeling very
positive: the FTSE100 is
back to where it was two
years ago (pre-Eurozone
crisis and in full
recovery mode) and people
I’m talking to are
feeling real enthusiasm
about the year ahead. The
“new normal” that we
exist in means that,
although growth will be
minimal by pre-crash
standards, it still
should be something to
celebrate. Mercer’s
Salary Movement
Snapshot
suggests that
UK employees are in for a
3% pay increase through
2013; I, for one, am
celebrating that!
  
   The picture is even
rosier in the management
consultancy world. The
MCA’s Consulting in 2013
report predicts a 5% rise
in fee incomes through
2013, with 77% of firms
interviewed saying they
expect their business to
grow. While 80% of fee
incomes still come
through the top 10% of
firms by size, this is –
to some extent –
flattening out and the
smaller and more
specialist firms are
showing more resilience.
  
   Firm
performance

 
    Growth has been the
report from most firms
publishing results in the
last quarter save for a
few strugglers. Of the
larger consulting
organisations, Ernst &
Young’s advisory function
is up 16.2% at year end;
its best year since 2006.
PwC has also reported a
7% revenue growth in its
UK consulting business,
including a net 3%
increase in headcount.
Similarly, Deloitte’s
consultancy is up 14%.
However, what we are
hearing on the ground is
while certain service
lines are booming
(Deloitte Digital, for
example), some of the
more traditional business
change consultancy
service lines are
struggling in the Big
Four. Off-the-shelf
solutions aren’t enough
any longer in the likes
of shared services and
outsourcing design and
delivery. KPMG has been
making redundancies while
the boutique consultancy
market in this area is
flourishing. For more on
this please read our blog
article regarding
boutique consulting.
  
   In the technology
players, Accenture is up
4% in revenue across
European consulting and
Atos is up 8% in revenue
 
  
   
 
 
 consultants. The firm has
had a fantastic year and
reported a 25% growth in
its business for FY
ending in April 2012.
This, it has to be said,
is in line with massive
growth reported across
various other specialist
firms in similar sectors,
with reports of up to
200% growth in the last
financial year.
  
   M&A

   The big story of the
last quarter was the
takeover by Deloitte of
the Monitor Group. This
demonstrates the firm’s
clear intent to continue
to expand its footprint
in the strategic
consulting space, as
outlined by Deloitte’s MD
of strategy & operations
consulting, Michael
Canning. Commentators
have speculated about
whether this will lead to
a full merger, or whether
the firm will try to
maintain the Monitor
brand in a “Monitor
Deloitte” entity.
  
   Elsewhere in M&A
news:
  
   • Deloitte has also
acquired mining
consultancy Venmyn for an
undisclosed amount, in a
move to consolidate its
existing mining advisory
services into a new
 
 entity: ‘Venmyn
Deloitte’.
  
   • Hitachi Consulting
has made a move to
bolster its management
consultancy services by
acquiring business
operations consultancy
Celerant. The deal, for
which terms were not
disclosed, will give
Hitachi a greater
footprint across Europe &
the Americas, as well as
combining with the rest
of the portfolio to allow
the firm to make a full
business transformation
lifecycle pitch. It is an
interesting move for the
highly acquisitive firm
which has previously
signalled its intentions
to pursue more of an IT
consultancy focus. I look
forward to seeing how the
new business develops.
  
   • In looking for ways
to enhance the company
network since its
management buyout and
re-structure last year,
Arthur D. Little has
partnered with Solidance
in APAC, a B2B growth
strategy advisory and
promoter of growth and
innovation in emerging
markets.
  
   continued on next
page...
 
 in consulting and
technology, driven by
public sector work (a
stark contrast though to
the 7% decrease across
the rest of Europe).
Cognizant has reported
revenue growth and is
expected to publish a 20%
increase for 2012
globally, driven by the
establishment of a
consulting-led approach.
CSC has also reported
another improvement in
profit through its Q2, a
sign of its slow
recovery, although total
revenue fell slightly.
Capgemini and IBM have
reported minor
contraction in consulting
services through Q3 of 4%
and 3% respectively,
though the latter is
reporting a huge increase
of 14% on the year to
date in its business
analytics offering.
  
   In the boutiques the
MCG has confirmed that
Alexander Proudfoot and
Kurt Salmon are
performing in line with
management expectations,
an improvement on the
outlook of the last
quarter. Baringa
Partners, the specialist
consulting in the energy
and financial services
sectors, now has 250