Consultancy sector shows signs of revival

  • @mrjamesashton

Spending on management consultants is growing at three times the rate of inflation and public sector work is increasing again after two years of dramatic declines. The annual survey from the Management Consultancies Association reports a 7 per cent leap in fee income in 2012, with the construction and transport sectors growing most rapidly. Consultants suffered steep falls when the economic downturn bit, especially in strategic advice as blue-chip clients put large-scale projects on ice.

The £9bn-a-year industry has bounced back well. From a 6 per cent decline in 2009, the industry grew by 1 per cent in 2010 and 5 per cent in 2011, according to MCA figures.

The financial services industry is continuing to spend on consultants as regulatory reform is worked out, including the ringfencing of retail from investment banking divisions. IT advice was also a strong area of activity last year, as companies looked to upgrade their computer systems or take out cost.

"As this data shows, there are still opportunities for growth despite the economic pressures," said Alan Leaman, chief executive of the MCA, whose members account for about two-thirds of the consulting industry.

Government spending on consultants was frozen when the Coalition took power three years ago but the industry reports a softening of that hardline stance. Paying for outside contractors will come under scrutiny again in George Osborne's spending review on 26 June. Despite growing again, fee income from public sector work remains 21 per cent lower than prior to 2010.

The trade body's members – which include Accenture, Atos, Hay Group and Mott MacDonald – forecast that economic pressures experienced in 2012 will either continue or intensify, with only a quarter of reporting an improvement in their order books measured by the number of projects they are working on.