Consultancy spending grew by 9.4% in the last year, double the growth rate recorded in 2002.
The key factor was investment in outsourcing consultancy services, which grew at 4.8%. ‘This is extremely encouraging for the consultancy sector,’ said Bruce Petter, executive director of the MCA.
‘The increase in IT and outsourcing consultancy over the last 12 months has supported a return to significant growth after a tough year in 2002.’
IT and outsourcing revenues were valued at £705m for last quarter 2003, which represented more than half of consulting revenue for the period.
Total revenue for the quarter was £1.34bn.
The last time revenues fell was back in the third quarter of 2002, to £1.11bn from £1.13bn over the previous three months. Petter said at the time many consultancy firms had implemented cost reductions and their profitability would improve during 2003.
Although there have been significant variations in the levels of growth quarter-on-quarter during the last 12 months, MCA members have predicted that the consulting industry’s fortunes will continue to blossom.
They expected improvements on future orders, average fee rates and an increase in the number of consultants employed. Members were enthusiastic about the prospects of business generation in financial services and the public sector, and primary industries such as utilities, mining and metals.
‘MCA member firms are also expecting the sales cycle for IT work to shorten in the next quarter, which suggests this (growth) trend will continue,’ added Petter.
Analyst Ovum Holway recently warned that, although outsourcing is the fastest growing part of the UK software and services market, consulting and systems integration will remain depressed until at least 2005.
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