UK consulting industry grows 2.5% in spite of pandemic

20 January 2021 4 min. read
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A new study from the representative body for the UK’s consulting industry shows that against all the odds the sector still grew in 2020. The 2.5% growth rate is much more positive than many expected – and it is forecasted to accelerate dramatically in the coming twelve months.

Each year, the Management Consultancies Association (MCA) uses the performance of its members to gauge the size and health of UK's management consulting market. Last year, the industry body stated that Britain’s advisory sector had seen its revenue surpass the £11 billion mark for the first time – however, with Brexit anxiety and a sluggish economy seeing clients tightening their belts, the study also highlighted a slowing of growth for the third consecutive year.

The MCA suggested that the industry would see even slower growth of just 4% through 2020, in what at the time seemed like a grave warning. Less than a year later, however, the news that by the organisation’s reckoning the British consulting market actually expanded by 2.5% is likely to be met with jubilation in some quarters.

Growth in 2020 and Forecast growth in 2021

This is because in the intervening months, the Covid-19 pandemic has derailed the national and global economy – and sparked grave concerns for the industry’s revenues as a result.

One example of this saw Source Global Research go as far as to forecast a dire 28% fall in revenue for the UK consulting market over the course of 2020. While Source and the MCA both estimate the size of the UK market in different ways – the former only examining firms of a certain size, the latter only taking into account members of its organisation – the MCA’s findings will certainly make for reassuring reading for many firms as they enter a 2021 which could be just as difficult.

The MCA drew its conclusions of the 2.5% expansion in the market from the number of consultants who still felt consulting activity met or exceeded expectations: in the organisation’s annual poll, 83% said as much.

Tamzen Isacsson, Chief Executive of the Management Consultancies Association (MCA), said, “Despite the continuing turmoil of the pandemic, the UK management consulting sector has demonstrated great resilience and flexibility in supporting clients and has achieved stable growth in 2020 from buyers of consultancy, highlighting the essential need for high quality external professional support during times of crisis.”

Working remotely

That is not to say that 2020 represented plain sailing for the MCA’s member firms, of course. Over 500 consultants participated in the independent survey, conducted by Savanta, from Heads of Consulting to junior management consultants, and of those respondents, nearly three-quarters said that the reduction of interaction with clients had caused them disadvantages.

Client Disadvantages

Over half (56%) found that there had been fewer opportunities to explore and discuss future work, and just under half said a lack of face-to-face meetings made it harder to tackle sensitive subjects with clients or colleagues.

At the same time, however, working remotely amid lockdown also provided a unique set of opportunities which consultants were able to take advantage of to survive and thrive. For example, 62% said they had cut spending on travel and hotels in the last year, while half of respondents said that they had a greater number of consultants available without the constraints of being ‘on site,’ and were also able to boost the amount of time spent servicing clients as a result.

Consulting's 2021 outlook

Despite the continued period of uncertainty in the UK surrounding the pandemic and the fallout of Brexit’s completion, the consulting market is expected to see growth hit its highest level in more than a decade.

According to the MCA, consulting leaders expect the industry to grow by 9% in the next 12 months, with the greatest area of growth in digital technology highlighting the critical importance of the sector in the economic recovery and urgent digital transformation of UK businesses.

Consulting activity growth in the next 12-24 months

While 54% of respondents told the MCA they expected digital and technology consulting demand to increase greatly in the next 12 to 24 months – as sustained homeworking pushes clients to ramp up their digital transformation efforts – a number of other service lines also look due a boost. More than a third of respondents said that health and life sciences, and government and public sector consulting would see increases in activity – with clients there also looking to adapt to the ongoing crisis.

Isacsson concluded, “Our industry will play a critical role in the future economic recovery and net zero ambitions over the next couple of years, reshaping businesses and continuing to fast-track digital transformation and consequently our forecasts look positive.”