MCA income reaches peak

The Management Consultancies Association has recorded the highest ever fee income in the fourth quarter of 1997. At the end of 1997 member firms’ fee earnings hit the #2bn mark.

Earnings grew by 12.4 per cent from the third quarter in 1997 to #548m in the fourth quarter of 1997. The MCA noted that this was the greatest single growth in fee income since it began publication of members’ accounts three years ago.

But it urged consultants not to be too optimistic, predicting that there could be a slump in contracts precipitated by the meltdown of the Asia Pacific economies.

The association believes that consulting firms could face similar pressures to those in the 1990 downturn.

“At the moment everyone is doing extremely well, but that was exactly the situation in 1990,” said Brian O’Rorke, executive director of the Management Consultancies Association. “Management consultants were helping clients downsize, with the net result that in 1991 all member firms had to make embarrassing cuts. And we are now seeing a drop in confidence.”

O’Rorke pointed out that GDP has slowed down more than the MCA predicted; it only rose to 1 per cent when the MCA over-optimistically predicted that it would rise to 1.7 per cent. The number of firms expressing optimism in the British economy dropped to 59 per cent in the fourth quarter, down from 79 per cent in the third quarter last year.

O’Rorke urged members “Be careful when you recruit, don’t recruit from cashflow, recruit to ensure that you have increased profitability and expertise.”