PracticeConsultingConsultants’ fee income dips

Consultants' fee income dips

Fee income earned by management consultancies in the UK dipped in the last quarter, with many consultants blaming a fall-off in the outsourcing market and the fallout out from the Enron and Worldcom affairs.

Members of the UK Management Consultancies Association reported revenues of £1.13bn for the second quarter of 2002, down 0.5% on the previous quarter. The fall followed two quarters of modest growth with fee income still 2% higher than at the same point in 2001.

The decline in fee income reflected reduced outsourcing consultancy revenue among some of the larger firms, according to the MCA. Both management consultancy services and systems development saw modest growth in the second quarter.

The survey also showed a slight strengthening in confidence amongst member firms with regard to business prospects. And with average costs falling marginally, the MCA expects profitability to be improving – albeit slightly.

MCA executive director Bruce Petter said: ‘The results of our quarter 2 survey reflect the current business environment, which is generally still tough for many organisations with growth limited to certain sectors and services.

‘The combination of corporate governance issues, reduced investor confidence and patchy economic recovery are undoubtedly having an impact on the professional services industry.

‘Whilst fee income has flattened in Q2 and prospects for Q3 look similar, there is stability and we would hope to see improvement across all sectors and specialisms in Q4.’

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