In recent years consulting has outperformed the wider economy. While the UK grew at 2.2% in 2015, consulting grew at 8.05%. Much of the rise in activity is connected to consulting’s support for businesses’ growth strategies. The economy’s return to growth after the shocks of 2008 and the recession is welcome. But it is also challenging. Business sectors have been hugely disrupted, not least by digital. So senior executives need advice to help them test new growth propositions and get ‘match fit’ for growth. Consultants are providing the insights needed. Consulting is growing by helping others grow.
Advice needs in the public sector have also grown in recent years. With diminishing resources and rising citizen expectations, public services have to achieve more for less. They need consultants to support ambitious transformational change programmes. With even more exacting spending cuts likely in the new parliament, consulting will remain at the heart of public service reform.
The UK’s decision to leave the European Union will ultimately shape the future of many industries, but what will it mean for consultancy specifically? For many it is ‘too early to say’. According to the MCA’s second quarterly Brexit survey, conducted in early 2017, the general consensus (85% of respondents) is that the Brexit vote has had a negligible effect on their firm’s revenue, though 8% now record a positive impact.
The effects of Brexit will of course differ between consulting sectors. Respondents suggest a more positive outlook for the manufacturing sector (as well as, to a less marked extent, for infrastructure and transport). Manufacturing’s position is doubtless linked to sterling’s competitiveness. By contrast, respondents suggest worsening prospects for private health/life sciences, a more polarised outlook for retail, while there is a notable intensification of concerns about financial services. High-profile reports of financial services institutions contemplating relocation will have contributed here.
MCA members, in common with many other business leaders, are very unlikely to want to see a ‘hard’ Brexit, and will favour the retention of many of the benefits of the EU, in particular access to skilled labour and the Single Market – though for many this is more significant for their clients than their firms.
It should be noted that these impacts are not post-Brexit. The UK has not yet left the EU. They are post-Brexit decision impacts. We will see how they change as we move nearer to final disengagement.
In 2015, digital remained the largest consulting service line. Recruitment of digital consultants across MCA member firms has rocketed. There are now around 12,000 digital consultants out of around 45,000 employees.
As our highly successful MCA Year of Digital has shown, consultants are active right across the digital value chain, from Big Data analytics, social media, Cloud, gamification, through to cyber security and even AI. This breadth of activity has two principal benefits.
The first is for clients. The MCA surveyed business leaders about digital. We discovered that while the topic is extremely important to them, they don’t necessarily have a detailed understanding of what it means. Consultants are steeped in digital culture. Some consulting firms have technology backgrounds. Many are recruiting digital experts to ensure that they have the most topical insights at their disposal. But as consultants, they also know that what matters to businesses is how digital will impact their strategy, recruitment needs, their investments, and most importantly their profitability.
Consultants can link cutting-edge digital insights to the business bottom line in ways business leaders can understand and relate to. They are helping digitise areas such as retail, where consumer expectations are driving huge channel shifts. They are transforming financial services (again increasingly in customer-facing areas, like retail banking) and in infrastructure, energy and utilities and manufacturing, they are linking data analytics to systems and products. Applying the concept of the ‘internet of things’, they are helping personalise the transport system, automate domestic heating systems and pioneer networked and (eventually) driverless cars.
The second benefit is for consultants. The rise of digital makes this a uniquely exciting time to work in the industry. Unlike many specialist digital boutiques, consultants get an opportunity to play with all the digital toys. At a recent Young MCA Year of Digital event, over 90% of young consultants said that digital made consulting a more attractive profession.
But digital is not the whole story of consulting. The industry is full of specialists in programme management, finance, operational excellence, marketing and communications, and human resources. Consulting constantly evolves, acquiring new capabilities to match changes in the economy. The political consensus on the importance of better transport, energy and communications networks as a driver of growth is reflected in the fact that consulting is active in every area of infrastructure, including the most specialised. Very often this relentless acquisition of new capabilities is a function of clients’ interest in getting things done. Consultants advise clients on how to address problems – and then often give them practical help as well.
One consulting staple that has reinvented itself is strategy. The traditional model of extended assignments producing long-term strategic plans is outmoded. In the relentlessly changing Digital Age, with its foreshortened business cycles and agile innovation culture, business must mobilise fast, fail fast, succeed fast. Things feel more tactical than strategic in this get-things-done, results game.
But this culture means businesses face complex problems, more intractable and unpredictable than ever before. Consultants bring the range of expertise clients need in strategically integrated teams that can help them deliver. And clients are still interested in the future. They can’t predict what will happen; no one can. But they need to know if they have the preparedness to deal with what does happen. They want to fit their investments, innovations and new ‘plays’ into a vision. Operating at both the strategic vantage and in delivery, consultants can test an organisation’s strategic resilience. They can help clients create a flexible and adaptable vision to guide them in their relentless tactical decision-making. As the challenges of growth in the private sector and getting more for less in the public sector become increasingly complex, strategy consulting is again on the rise, accounting for over 10% of all consulting activity in 2014.
The UK is regarded globally as cutting edge in consulting. It is also regarded as being exceptionally innovative in sectors where consultants are active, such as retail or health. Consultants are leading advisers on financial modelling, public service reform and digital consulting. They are helping retailers cope with change and disruption. They are helping transform A&E and supporting new approaches to integrated care. So, it is understandable that they are much sought after beyond these shores. Active in the Eurozone, but also in the Middle East, North America and Asia Pacific especially, our members continue to indicate in surveys that they expect to expand their overseas operations further in the coming years.
Opportunities and challenges for the sector
In common with the rest of the economy, consulting faces significant challenges in how to secure the skills it requires for the future. Skills needs raise questions about our education system and the free movement of labour across borders, debates in which MCA members are heavily involved. Digital skills are obviously at a premium. But so are core business skills. Blending emerging skills with ‘traditional’ ones is a basic challenge for the whole economy and one which consulting is taking seriously.
The ongoing challenge consulting firms face is the need to transform themselves. They must keep pace with what is happening in the economy and ensure their advice to clients to modernise is rooted in a change culture of their own. They also need to embrace digital opportunities in their resource management and the delivery of assignments. Our members are doing so with gusto.
What does this mean for graduates entering the job market?
There has never been a more exciting time to be a consultant. The industry operates across all sectors of an increasingly exciting, challenging and protean economy. It is central to digital. And it is open to new talent. In 2015 we saw a 13% increase in new recruits and graduate hires.
Partly to address the dynamics of digital and the challenges of growth in unpredictable and fast-moving economic conditions, MCA member firms are hungry for recruits that don’t necessarily conform to the identikit British corporate type. The industry will still need great brains and dogged, detailed analysts. But it is also needs creatives, coders and people who see things differently.
Graduates looking for an opportunity to work on an array of cutting-edge projects with some of the biggest names in the FTSE 100 or major departments of state and public service bodies, need look no further than management consulting.
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