The UK consulting market 2016: A tale of two services

By Fiona Czerniawska

Our latest report on UK consulting pegs growth in this market at 8.2%, that’s up from 6.6% in 2014 and means that, for the second year running, the UK is one of the world’s most attractive consulting markets.

Inevitably, though, growth isn’t spread evenly across all industries or service lines: two areas stand out.

The first is risk and regulation.  That’s not a new story, but it does have a bit of a new twist to it.  As we’ve pointed out before, demand is bifurcating, with the more familiar areas being commoditised and industrialised, as clients seek to limit the overall amount of money they have to spend in this area, and the less familiar areas commanding greater executive attention and higher fee rates.  We thought that might lead to a slow-down in growth overall, because the bulk of consulting falls into the first, commoditised category and because clients here are seeking to bring fee rates down even if they can’t reduce their actual workload, but it appears that the amount of regulatory change is still more than enough to maintain demand.  The risk and regulatory consulting market, worth just over £500m in 2015*, grew by 12%.

The second is digital transformation.  For all the talk about this area in 2014, only a few organisations then were prepared to invest in significant projects, but that changed in 2015.  “It’s something that comes up in every conversation with the C-suite,” said one senior partner we spoke to.  Or as another put it: “Digitisation and the disruption it's causing is creating huge opportunities, and that’s where we’re seeing a lot of our client work. Questions now aren’t around whether the client should have a digital initiative but about how digital is fundamentally changing the ways entire industries work.”  The fact that strategy consulting in the UK grew by 8.2% last year, and technology by a slightly higher 8.7%, can largely be attributed to digitisation.  Sizing the digital consulting market is tricky because it overlaps with other, traditional services: where does operational improvement stop and digital transformation start, for instance?  However, we estimate that consulting work associated with digital was worth £1.3bn overall in 2015. 

If you’re a consulting firm that’s looking to grow in the UK market in 2016, you’re going to need a foothold in at least one of these camps.

*According to our definition of consulting which excludes the long tail of very small firms.

To find out more about our UK report, please contact Charis Buckingham.