Outsource Magazine

A recent report from the MCA (Grace under Pressure: The resilience of management consulting in challenging times) argues that the UK’s consulting industry has responded well to recent economic storms. Indeed, the first half of 2011 saw a healthy growth in consulting revenues, even against the backdrop of a significant drop in income from the public sector.
But the mood as we enter 2012 is even more uncertain. Business confidence fell markedly in the later months of 2011 as the crisis in the eurozone dominated the media; almost half of the senior consultants surveyed in The MCA Barometer in November believed that the economy will deteriorate further in the next twelve months. This economic downturn is turning out to be unlike any other.

One consequence is a growing interest amongst consulting firms of all sizes in overseas markets, right around the globe. MCA member firms generated around £900m in export earnings in 2010 and many firms have told me that the proportion of their income which is generated abroad has risen significantly in recent years.

Figures for 2011 show that most exports are to the eurozone countries and therefore highly sensitive to a recession or slowdown in the single currency area. Emerging markets have been less important, but we expect this to change over the next few years. 

Indeed, an increase in professional services exports to these markets could open up a new generation of opportunities for UK-based management consultancies, and would fit exactly with the government’s desire to ‘re-balance’ the UK economy through increased earnings from abroad and reduced reliance on the financial services sector.

So we’ll be looking in 2012 for a renewed push from government ministers and others behind the UK’s professional services sector and working with UKTI and others to ensure that we are fully integrated into their work programme. 

The UK – and London in particular – provides an excellent hub for high-quality professional services companies. It is a great platform from which to operate, with many key markets within easy reach and a strong reputation for excellent work.

In this context, it is surprising that we haven’t seen a significant pick-up in consulting around outsourcing here at home – the vast majority of MCA firms have reported a static market and they are not bullish, yet, about prospects for transformation in the public sector, despite the pressures of the deficit. Our information suggests that there will be much less diversity of provision and competition at the end of this Parliament than is envisaged in last year’s Open Public Services white paper. This is one arena in which the UK can and really should show the way.