New report finds that recovery in financial services stopped the management consulting sector from contracting by around 15 per cent…

Despite further substantial falls in public sector consulting expenditure, a new Sourceforconsulting.com report released today (24th January 2011) finds that there has been a spike in demand for strategy consulting. The report also found that financial services has propped up the consulting market over the last six months – stopping it from contracting by around 15 per cent.

The report, which surveys leading buyers of consulting services,[1] found that the public sector’s use of strategy consulting almost doubled (13 per cent to 24 per cent), making strategy the most bought service in the sector. The report says that this is very much consistent with what has been happening in other sectors.

Fiona Czerniawska, Director of Sourceforconsulting.com said:

“Every time a sector enters a new phase of the economic cycle, demand for strategy consulting jumps as organisations try to work out what the changing conditions mean for them. Therefore, the current spike in demand is entirely predictable given the upheaval the public sector is experiencing.

There’s a caveat here; which is that strategy has increased its share of a dramatically shrinking market. This is nothing more than a spike, and once the public sector works out what it is doing, the last people most public sector managers are likely to call on are strategy consultants.”

Financial services consulting continues to grow

The financial services consulting market continues to grow, albeit at a much slower rate than it has been doing recently. More money has been spent on advice around front-office issues – much of it driven by regulation and restructuring – than on any other consulting service in the financial services sector in the last six months.

Despite most evidence pointing to the idea that the Big Four firms are dominating consulting in the sector, the biggest beneficiaries of the focus on front office at the moment appears to be small, specialist consulting firms. The report says that the evidence from clients suggests that these smaller players may have tripled their share of the financial services consulting market in the last six months, compared with the previous six months.

The report also predicts that there will be growth of 1-2 per cent in the financial services sector over the next six months. Outside of financial services, the consulting market in the private sector may well have contracted by as much as 10 per cent, with some organisations claiming to have spent more than 50 per cent less on consulting in the second half of 2010 than they did in the first.

Fiona Czerniawska commented:

“Few people will have enjoyed the idea of bankers popping champagne corks to celebrate their end of year bonuses, but here’s a sobering thought: without the financial services sector, the consulting market would have contracted by about 15 per cent in the last six months.  As it is, the market probably contracted by a more modest 3-5 per cent, with growth of about 5 per cent in financial services taking most of the sting out of the reduction in expenditure elsewhere.”

 

Across the consulting market the report also identified the following trends

Strategy consulting soared, increasing its share of clients’ expenditure by nearly 40 per cent.

Marketing and selling consulting is back on the agenda in financial services.

Big Four firms lost share to specialists within the financial services sector.

The share of the market accounted for by IT consulting has fallen sharply.

Demand for operational improvement consulting is as strong as it has been since the outset of the economic downturn, but traditional operational improvement firms may not be the main beneficiaries.

 

For further information on the Sourceforconsulting.com Quarterly Trends in Consulting Buying report, visit www.sourceforconsulting.com or contact Julie Cleasby on 020 3178 6445.

 

 

For further information about this press release, please contact:

 

David Pippett, DWP Public Relations

Tel: 07899 798197

Email:  david@dwppublicrelations.co.uk

 

Edward Haigh, Head of Content and Marketing, Sourceforconsulting.com

Tel: 0845 293 0993

Email: edward.haigh@sourceforconsulting.com

 

 

About the Quarterly Trends Report

Source (www.sourceforconsulting.com) has relationships with about 200 organisations whose combined annual consulting spend represents around £2.5bn ($4bn). It surveys this base of clients on a quarterly basis to gauge the state of the consulting market from a buyer’s perspective, asking questions about spend over the last six months and expectation for the next six months. The latest report is the ninth to be published to date.

 

About Sourceforconsulting.com

Sourceforconsulting.com is a leading provider of information about the market for management consulting. Set up in 2007 and based in London, Source serves both consulting firms and their clients with expert analysis, research and reporting. We draw not only on our extensive in-house experience, but also on the breadth of our relationships with both suppliers and buyers. All of our work is underpinned by our core values of intelligence, integrity, efficiency and transparency.

 

Sourceforconsulting.com is owned by Source Information Services Ltd, an independent company, which was founded by Fiona Czerniawska and Joy Burnford. Fiona is one of the world's leading experts on the consulting industry. She has written numerous books on the industry including: The Intelligent Client and The Economist books, Business Consulting: A Guide to How it Works and How to Make it Work and Buying Professional Services. Joy Burnford was Marketing and Operations Director at the UK Management Consultancies Association between 2003 and 2010, and prior to that worked for PA Consulting Group and has extensive experience of marketing consulting services.