PracticeConsultingMajor players stall as sector shows positive signs

Major players stall as sector shows positive signs

Polarisation within the consulting industry has benefited the smaller firms - but the top 10 firms still hold the lion's share of fee income

Link: Click here for the full survey results

Smaller consultancy firms have performed well compared to more established big players in the industry, the latest Management Consultancy top 75 consulting firms’ survey has revealed.

Management Consultancies Association president Lynton Barker has praised the work and standards of smaller consultancies.

Barker said that polarisation within the consulting industry was a positive step. ‘We’ve got a proliferation of small firms that are now just as important as their larger counterparts,’ he said.

He also predicted stronger links between top and bottom-tier consulting firms. ‘It’s not as if there’s a dogfight between the big firms and the smaller ones,’ said Barker. ‘It’s more like the smaller firms of market specialists are not competing with each other. It won’t be long before 40% or 50% of (consulting) work will be done in collaborations together.’

Barker said that standards among smaller firms had ‘grown exponentially’ in recent times.

But he warned that these same firms will have to maintain the ‘high standards they have been setting over the past few years if they are to maintain or increase their collaboration with larger consultancies’.

The survey found that large consulting firms, such as Partners for Change, Charteris and Computer Sciences Corporation, saw double-digit falls in fee income, but smaller firms such as Maxwell Stamp and Parkwell Management Consultants saw fee income grow strongly.

Despite positive results for small and mid-tier consulting firms, the top 10 firms still command a massive £3.2bn in fee income compared to just over £1bn for the next 65.

Barker confirmed that ‘many businesses cannot afford the larger firms’.

One of the main factors behind the larger firms’ lack of fee income growth was the huge amount of restructuring and integration they have undertaken following the collapse of the consultancy market over the past three years, according to the survey.

Eleven firms had a fee income over £100m, although their combined fee income fell by £14m to just below £3.3bn.

Of these ‘mega consultants’, only the re-branded Capgemini suffered a significant fall. Its fee income fell 25% to £250m, from £332m in 2002.

A Capgemini spokeswoman blamed ‘market conditions’ for the drop in income.

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