Consulting revenue of MCA members reaches £5.2 billion

16 June 2015

UK consulting firms member of the MCA have last year seen their revenue grow by 8%, outpacing the average growth rate in the market, reveals new data from the industry association. With total revenues of £5.2 billion the 50+ members hold approximately 60% of the UK’s consulting market.

Every year the MCA (Management Consultancies Association), the representative body for management consultancy firms in the UK, conducts research among its members to gain insight in key financial developments. Its ‘UK Consulting Industry 2015’ report presents an overview of the financial performance of its 50+ members, and provides insight in the key developments across service areas and industries.

UK management consulting market

The study shows that 2014 was a good year for MCA members, which includes large global firms such as Accenture, EY and BDO, as well as UK-based advisories such as Berkeley Partnership, Boxwood, Moorhouse and PPL. The combined revenue of MCA-members grew by 8.4% to £5.2 billion – the largest growth rate achieved since 2007, when the market expanded by 10%. Throughout the crisis years growth has been either negative (2009) or sluggish (2010; 2011), with the industry picking up since. The improving performance in finances however does not come as a major surprise, a previous survey from the MCA conducted last year already showed that more than 90% of member firms had either met or exceeded their fee income expectations for the year. 

With a total turnover of £5.2 billion, MCA members represent 60% of UK’s consultancy market, estimated by the MCA to be worth £8.6 billion*. Consulting numbers increased amongst MCA member firms by 12% in 2014 to around 38,000. “UK consulting continues its recovery at a rate faster than the wider economy, including most other professional services. Consultants are supporting businesses in getting ‘match fit for growth’ – either through developing existing capabilities or through launching new propositions. Consulting is growing by helping others grow”, comments Paul Connolly, Director of the MCA Think Tank and author of the report.

UK consulting market growth

From a functional perspective strategy consulting and digital consulting were among the best performing areas. Strategy consulting grew by 44% in 2014 to £537 million and now accounts for a tenth of all consulting activity. Member firms relate the sharp increase to the increasing willingness of clients to distinguish the value of consulting which brings together a range of skills and expertise to address complex strategic problems, from what is on offer in the low-cost, low-quality contractor and interim markets. Digital consulting grew by 27% to £1.4 billion, making it the largest segment within the UK consulting industry. Activity covers advice on Big Data, Cloud, Social Media, Gamification, Mobile and even Artificial Intelligence.

Consulting fee income by service areaOperations and Project Management are after Digital the largest service areas, accounting for 13% and 12% of the market respectively. Environmental advisory and consultancy in the sales & marketing domain are in the typology of the MCA the smallest segments, each with a market share of 1%.

Industry-wise financial services remains the largest private sector buyer of consulting services (30% of market) and grew slightly last year. Consultants note that while some of this activity still concerns getting the sector in order after the financial crisis, the sector is sounder than it was and many of the new projects are improving service to customers through Digital. Infrastructure – although one of the smallest industry areas – grew by an astonishing 43%, testimony of the major projects MCA members are involved with, such as the Thames Tideway and Crossrail. The segment is expected to remain buyout, with developments such as AMP6 in Water, the possible expansion of airport capacity and the creation of Highways England forecasted to drive future work.

Aggregate public sector consulting fee income

The public sector, the second-largest industry in terms of aggregate fee income, returned to healthy growth last year, however spending is nowhere near the peak level at the start of the last Parliament, when it was around £1.8 billion. Executives of MCA members say the growing spending is of new “long-termism” on the part of officials, driven by the need to achieve more for less. Consultants also note that the character of public advice is changing, being less about rescuing failing services and more about transformational change.

Looking ahead the MCA believes the UK’s consulting industry will be able to accelerate its growth, reaching 9% growth by 2017. Yet the MCA signals that the landscape is changing, with a growing divide between high- and low-value service providers. “Demand is rising for consultants who can provide solutions to complex and novel problems”, states Alan Leaman, CEO of the MCA, in the report. Firms that are not able to create the multi-disciplinary and multi-expert teams that are now needed to achieve the complex and inspiring outcomes that clients seek risk losing out. “Classic consulting is returning”, he says, relating to the growing demand, “and being reinvented.”

* Analyst firm Source estimates the UK consulting industry to be worth £6 billion – the discrepancy arising from different definition of consulting services and scope attached to firm size.



Accenture's push into the creative sector is an identity crisis

18 April 2019

In its latest push into the creative sector, Accenture Interactive acquired New York and London-based ad agency Droga5 earlier this month, adding illustrious clients such as HBO, Amazon and The New York Times to its roster of clients. With the latest in a long line of similar purchases, Accenture Interactive further demonstrated its ambition of becoming the globe’s leading trusted advisor to chief marketing officers. Yet according to Ben Langdon, Chairman of Class35, Accenture’s strategy may be heading in the wrong direction.

A press release on Accenture’s website announcing the acquisition sits next to a quote stating that “brands aren’t built through advertising” – a huge contradiction from a consultancy firm hell-bent on becoming the ‘CMO agency of choice’. It’s not alone of course. The entire consulting industry wants a piece of the creative pie right now. In addition to Accenture Interactive, recent acquisitions by PwC Digital, IBM iX, and Deloitte Digital meant that in 2017, for the first time ever, four of the world’s ten largest creative agencies were consultancies.

So just what it is that Accenture wants to achieve from this? For one thing, it’s clearly trying to be a digital transformation business. A one-stop creative shop rivalling more traditional models, it wants to lure CMOs in with the promise of lower ad spend and a “more impactful customer experience”. At the same time, though, it’s still in thrall to those same slinky, shiny branding and advertising agencies it’s attempting to disrupt. The Droga5 acquisition and that of Karmarama a few years before are both testament to this.

There’s a fundamental problem with this, though. Digital transformation businesses don’t sell to CMOs. These people have enough on their plates trying to transform their own marketing skills in order to keep up with an ever-changing market – they just don’t have the time or the energy to concern themselves with digitally transforming a whole business. If Accenture’s purpose is digital transformation, then going after creative agencies is barking up the wrong tree.Is Accenture's push into the creative sector an identity crisis?

Worlds apart

Perhaps more importantly, these two industries are worlds apart in terms of the way they think. Creative agencies are all about ideas, campaigns and consumers. Digital businesses, on the other hand, are customer-driven – they think in terms such as lifetime value, measurement, and efficiency. Customer-led thinking is an entirely different beast to consumer-led thinking.

The reality is that the arrival of digital and an all-encompassing obsession with technology, measurement and social has led to the death of agencies in a reductive, zero-sum, efficiency-focused battle with brands. Indeed, agencies have become so obsessed with the latest tech fads, they’re beginning to forget how brands work. Worse still, they’re beginning to forget how brands are built. And, by forgetting, they’re destroying their own values.

Killing creativity

All things considered, it really feels to me as though Accenture is a chip leader in a game it doesn’t understand. Expensive acquisitions like these show that they’ve got the big money, but they don’t appear to have any idea what they’re doing with it. Take talent, for example. The best talent in the creative industry right now is out in the market; it’s not tied to any one agency. Both agencies might well be at the top of their game, but why would a consulting firm waste so much money on buying them when they could hire high-quality creative talent on a contingent basis instead?

As their presence in the top 10 creative agencies shows, there is a growing trend in which Accenture, like many of the other big players, are buying up agencies as if they were nothing more than keywords. What they’re really buying, though, is a collection of credentials, clients and IP. Unfortunately, the talent that created those credentials aren’t going to stay at the business, the clients that hired the agency in the first place won’t be interested in buying what is basically just another part of Accenture, and the IP never really existed to begin with.

Droga5, for example, was one of the few agencies that did great brand work the old-fashioned way – undoubtedly something that made it attractive to Accenture in the first place. The irony, though, is that by leading it further away from the way of working that made it so special, the consulting giant will kill its creativity.

“Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record…. But, in flashing its cash, it is spending millions on acquiring nothing of any value.”

If pressed, the recently acquired agency staff at Accenture will tell you just how dysfunctional the new arrangement is. They’re largely unfulfilled. Rarely do they feel their work has any sort of meaning or purpose. What’s more, the different disciplines have found little or no common ground, and find it hard to work together as a cohesive whole. It’s not surprising, then, to see talented people leaving in droves.

Beyond the window dressing 

It’s clear, then, that consulting firms and creative agencies are no easy bedfellows. But in his company’s defence, Accenture Interactive’s Senior Managing Director for North America, Glen Hartman, described its culture as being “far, far away from what a stereotypical consulting firm would look like. Our office and studios look a lot like Droga5’s.”

In demonstrating a belief that office design equates to workplace culture, this statement serves as an illustration of how confused Accenture is right now. It wants to justify its new strategy so badly, it’s started dressing like a creative agency. But if you look beyond the window dressing and see that you and your partners are speaking a different language with a different purpose, selling to different people in a different market, there’s no getting away from the fact that you’re different.

Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record, and it wants to dazzle others with its new direction. But, in flashing its cash, it is spending millions on acquiring nothing of any value.

Related: Space between consulting firms and creative agencies is converging.