Announcement

Consultancy sector returns tosignificant growthManagement Consultancies Association (MCA) Quarter 4 2003 figures released in Februaryshow growth in annual consultancy spending has doubled . . .

Copyright © 2004 John Wiley & Sons, Ltd. Strategic Change, May 2004

Strat. Change 13: 163–164 (2004)Published online in Wiley InterScience(www.interscience.wiley.com). DOI: 10.1002/jsc.672 Strategic Change

Statistics released today by the Management Consultancies Associ-ation (MCA), the trade association for UK-based consulting firms,show a 9.4% growth in consultancy spending in the last year.1 Thisrepresents a doubling of the growth rate over the last 12 months.

Outsourcing — key driver in Quarter 4

The key driver in Quarter 4 was outsourcing consultancy services(OCS), which grew at 4.8%. This growth reflects the ongoing trendtowards OCS and IT-related consulting, which has increased byover a quarter (28%) in the last 12 months and doubled in the lastfive years.

On the basis of the MCA data it is estimated that UK consultantsgenerated over £10 billion2 in annual fee income in 2003 for thefirst time in the history of the industry. Commenting on the find-ings of the survey, Bruce Petter, Executive Director of the MCA, said:

Whilst we did not expect a return to double-digit growth in2003, if ever, the increase in IT and outsourcing consultancyover the last twelve months has supported a return to signifi-cant growth after a tough year in 2002. This is extremelyencouraging for the consulting sector. MCA member firms arealso expecting the sales cycle for IT work to shorten in the nextquarter, which suggests this trend will continue through 2004.

Confidence in consulting sector

Although there has been a significant variation in the levels ofgrowth quarter-on-quarter during 2003, the Quarter 4 survey found

1 Underlying growth rate excluding new members (growth rate inclusive of newmembers was 17%).2 Estimated UK Market Fee Income (MCA Fee Income in 2003 was over £5 billion).

164 Announcement

that MCA members expect the consulting industry’s fortunes toimprove with future orders, average fee rates and consultantsemployed expected to increase.

Predicted hot sectors

In Quarter 4, MCA members were optimistic about business generation from the primary industries (including utilities, miningand metals), financial services and the public sector.

Confidence in UK’s economic performance continuesto grow

Consultants’ confidence in the UK’s economic performance hasimproved in the past four quarters, reversing a downward trend inconfidence seen for most of 2002.

MCA revenue by type, Q402– Q403

Activity Q402 Q103 Q203 Q303 Q403 Growth GrowthQ303–Q403 Q303–Q403(reported) (underlying)

£m £m £m £m £m % %MCS 590 640 631 631 631 0.0 -0.6ITC 272 275 284 292 293 0.3 0.3Subtotal 862 915 915 923 924 0.1 0.1OCS 277 299 324 393 412 4.8 4.8Total 1139 1214 1239 1316 1336 1.5 1.2

% Growth 2.5 6.6 2.1 6.2 1.5

MCS — includes strategy, HR and marketing.ITC — includes IT consultancy and systems development.OCS — outsourcing consultancy.

The Management Consultancies Association (MCA) wasformed in 1956 and represents the leading UK-based consultingfirms, which employ around 28000 consultants and generate £5bnin annual fee income. MCA members work for most of the top FTSE100 companies and all government departments. Management consultancy is an increasingly important industry for the UKeconomy, with revenues for 2003 estimated at £10bn, contribut-ing well over £1bn to the UK balance of payments.

For more information please contact:

Sarah TaylorDeputy DirectorManagement Consultancies AssociationTel: 020 7321 3993/0777 9660958Email: Sarah.taylor@mca.org.uk

Copyright © 2004 John Wiley & Sons, Ltd. Strategic Change, May 2004