Consultants cautious despite £1bn boom
Boom year for consultancy profession but financial service sector's woes threaten to eat into the 2007 gains
Alan Leaman
The UK consultancy profession has enjoyed a boom year, with the biggest firms
piling on an extra £1bn in revenues,
But financial service sector woes are already threatening to eat into 2007’s
gains, experts said.
The 21st Accountancy Age survey of the leading consultancies reveals
that the top 75 firms posted an extra £1bn in revenues in the last year to over
£7.1bn. The industry grew by nearly 18%, beating last year’s projections of an
11% gain.
The financial services sector represented 30% of total fee income, around
£2.1bn. But previous surveys have shown that in tougher economic conditions
financial services revenues fall dramatically.
‘Between 2001 and 2002 for example the fall in financial services revenues
was 27%, or £430m, and it took five long years for fee income from this market
to get consultancy back to where it had been,’ said survey author Philip Abbott.
Management Consultancies Association CEO Alan Leaman said financial services
revenues would ‘inevitably slow’.
‘The upheaval in the financial services sector will inevitably slow this
level of growth and our own half-year survey suggested this was already starting
to occur. Financial services is an enormous strength for the UK economy. We are
looking to the government and FSA to protect this sector.’
Consultants working in sectors providing advice in tough times, such as
outsourcing and change management, could prosper, he added.
‘Turmoil brings change and the best companies will be using consultants to
maximise their competitive advantage at this difficult time. Current market
conditions undoubtedly mean challenging times for many organisations,’ said
Deloitte head of consulting David Owen.
‘However this means a greater need than ever for businesses to operate more
efficiently than ever’.
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Three firms, Accenture, PricewaterhouseCoopers and IBM Business Consulting
Services, all posted growth of more than £100m. Last year nine firms posted fee
income above £220m, compared with 14 in the latest survey.
PwC increased its market share to 5.6%, compared to 4.8% last year. Accenture
holds the greatest market share, at 13.7%, a fall from last year’s share of
14.1%.