(last updated July 2019)
What has been happening in the management consultancy sector?
According to statistics published by the Management Consultancies Association (MCA) the UK management consulting industry is estimated to be the largest in Europe. Although in recent years the role of the management consultant has become increasingly important - helping management to handle and implement all manner of change in the workplace - it is important to remember that demand for management consultancy services is affected by the state of the economy.
During times of downturn many clients - including the public sector - keep the amount they spend on consultancy services to a minimum or decide not to use consultancy services at all. And because many weaker businesses fail, the pool of potential clients shrinks too. Smaller consultancies are generally the first to suffer from a downturn in the economy - but they are often also the first to recover when conditions improve. When things pick up many clients start spending on consultancy services in a small way and then increase their spend as the economy strengthens and business confidence returns.
In the early 2000s the sector suffered from market instability because of the global threat of terrorism and the war in Iraq. Many consultancies had to reduce the number of staff they employed. This led to the growth of small or 'niche' consultancy firms set up by consultants who had been released by the larger firms.
The mid 2000s saw the market for management consultancy pick up once more, with the fortunes of smaller firms in particular showing an improvement. Many consultancies benefited from a significant increase in the amount of work outsourced to external consultants by both local and central government departments. This increase in demand boosted the number of consultants leaving larger firms to set up on their own, making the small firm consultancy sector very competitive.
The late 2000s saw the economy slow down considerably. Substantial cost cutting in the public sector had a very significant impact on management consultants who focus on working for government organisations. The economy remained very weak into the early 2010s, although things began to improve during 2013. The mid 2010s saw the economy continue to strengthen, although a great deal of uncertainty resulted from the vote in June 2016 to leave the EU. It is expected that this uncertainty will have an adverse effect on the economy so that growth will be lower than previously predicted..
The economic downturn was actually good news for some consultants, who saw increased demand for downsizing, outsourcing and other efficiency measures from businesses and organisations which were forced to cut costs. Moreover, as the economy began to recover during the mid 2010s, freelancing and self employment became increasingly prominent as the workforce took on a new and generally more flexible nature.
Recent years have seen the emergence of environmental consulting. It has become important for businesses to demonstrate their 'green' credentials and ethical practices to their customers - something which specialist environmental consultants can help them with.
The five key trends in UK consulting are identified by the MCA as:
- more diversity for clients due to the highly competitive market with a constant flow of new entrants
- more diversity within consultancy firms, with new ways of working to reflect the digital age
- pressure following the financial crisis to look for new overseas markets
- providing the bridge between new technology and the challenges facing leaders
- new ways of doing business, including contracting by results
The MCA has found that although the market for management consultancy has been growing in recent years, the rate of growth has slowed, with the fastest growth recorded by medium-sized (particularly niche) consultancies. The service with the highest earnings is technology related, due to the need to put in place disruptive techniques to head off new market competitors by implementing Artificial Intelligence, automation, robotics and data analytics.
Recognising the challenges faced by management consultants in delivering profitable projects, the MCA makes the point that successful projects depend on close control of every stage. On winning a bid, management processes must be put in place to keep track of progress towards delivering a successful outcome, both on time and on budget. As the project progresses, your documentation needs to record what is working and what isn't, and the adjustments needed to keep it on track.
Keeping up to date with developments
Joining a trade association is an excellent way of staying up to date. There are two main professional bodies for management consultants in the UK, both of which provide a great deal of support and information to their members.
The Institute of Consulting (IC) is the main professional body for UK management consultants. It is an organisation within the Chartered Management Institute. The IC has a code of professional conduct and practice for members and is the awarding body for the Certified Management Consultant (CMC) qualification. You can contact the IC through their website.
The Management Consultancies Association (MCA) represents mainly larger management consultancies and provides a great deal of support, information and industry research to its members. It also produces a number of useful publications. You can find out more on the MCA website.
Subscribing to and reading a professional journal is another excellent way of keeping up to date with developments. There are several professional journals and online resources of interest to consultants, such as:
- Professional Manager magazine, published by the Chartered Management Institute
- Management Today magazine
Your network of contacts is another useful way of keeping up with any important developments in the sector. The IC and the MCA both have a list of networking events on their websites. The IC also has a full programme of regional networking events for members.