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Smaller consultancies thrive as emerging markets beckon

MANAGEMENT CONSULTANTS saw a healthy increase in fee income during 2012, with smaller firms picking up international assignments.

Members of the Management Consultancies Association (MCA) contributed towards the industry being valued at £9bn. They cited construction and transport as two of the biggest growths areas in the year, accounting for much of the fee income increase. Emerging economies was also a strong market for consultants, with small specialist firms picking up work as global business expanded into new territories.

“The UK is a highly successful base for consulting firms,” said MCA chief executive Alan Leaman. “And clients are looking for performance improvement, reducing costs or improving processes.”

The Big Four firms had also performed well in 2012, ahead of the rest of the market. “They are continuing to acquire and grow,” said Leaman. “We are seeing more and more major accounting firms promoting in the consulting space.”

A third of MCA members expect overseas income to rise slightly, while a fifth expect it to rise markedly.

Consulting around IT represented a fifth of the fee income, while other core consulting services performed well: financial systems and analysis; operational performance; and project management. These services represented around two-thirds of the fee income as a whole.

Smaller firms are also expected to win as the government rolls out its ConsultancyONE framework, designed to open up the public sector markets to smaller businesses. Changes in local government and the health service have provided work for consultants, Leaman suggested, with central government a likely provider of work in the future.

However, only a quarter of firms report an improvement in their order books measure by the number of projects for the next six months.

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