London’s dominance boosts consulting
London’s position as the world’s leading financial centre has boosted growth of the UK’s management consultancy market
The latest figures from the Management
Consultancies Association reveal that its members, who represent two-thirds
of the UK consulting industry, saw 16% growth to £5.4bn in 2006. The whole of
the industry is estimated to be worth £7.7bn.
MCA chief executive officer Peter Hill said a year of healthy growth had been
achieved through expansion in the financial stature of the capital city.
‘London’s growth in its financial stature has drawn activity away from other
financial centres and has fuelled investment in IT,’ said Hill.
Financial services consulting work was one of the fastest growing sectors,
increasing by 31% to £1.1bn. Efforts to improve IT in the financial services
industry saw the service line post strong figures. IT consulting as a whole grew
to £1.5bn, up 24% on 2005.Financial management consulting, an area the big
accountancy firms are trying to break into, boomed, up 28% to £415m in 2006.
The report said regulation had been the clear driver here with many
organisations still working through the systems and process implications of
compliance. However, although more changes are on the agenda, this is now a
comparatively mature market and one that many firms expect to have peaked.
Consultants did not see growth across the board. The public sector, which has
fuelled a boom in consulting services in the 21st century, saw growth stagnate
to single figures. The market was worth £1.6bn, a 5% increase on 2005.
Hill said there had been concern in the market about the explosion in focus
on the public sector market.
Other high performing sectors included manufacturing and construction, which
grew 49% to £578m.
The growth was due to demand for work in electrical engineering,
pharmaceuticals & biotechnology, and consumer products.
The war for consulting talent intensified during the year. MCA members
collectively employed over 18,000 fee-earners, an increase of 26% on 2005. Con
sulting firms, despite their recruitment spree, warned that a shortage of good
staff was still the biggest problem facing the industry.