UK management consulting industry sees revenue hit £12 billion

UK consulting managed to shrug off pandemic pressures to record a solid year of growth in 2020, according to a report from the industry’s representative body. The new study found the sector’s growth was almost double the rate expected for the year, with firms managing to tap into global demand to make up for declines in work in the UK or Europe.

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. The data was keenly awaited at the turn of the year, with many experts expecting the worst for the industry, with the UK economy having been ravaged by a pandemic and historic recession through 2020. When the MCA released early estimates of the UK management consulting industry’s performance, however, quite a few members of the industry undoubtedly issued sighs of relief.

According to the initial figures, the MCA estimated that the industry had seen revenues expand by around 2.5%. While this represented a notable fall on the previous year’s growth, in the context of the pandemic it was almost a pleasant surprise. Six months later, having had more time to receive data from its members and estimate the growth of the wider market, however, the MCA has upgraded its analysis.

Ahead of 2020, the MCA had predicted that the industry was due to see growth of around 4%, due to Brexit anxiety and a sluggish economy seeing clients tightening their belts. Now, the organisation believes that UK consulting may have actually outperformed that pre-pandemic estimation.

The MCA’s network of member firms reported a combined revenue of £6.26 billion for 2020, and assuming this performance was replicated across the rest of the national industry, the UK consulting industry would now be worth £12.52 billion. This would represent growth of 4.5% on 2019’s figures, when the MCA’s assessment asserted the industry was worth £11.4 billion.

It should be noted that the MCA’s figures do differ from other organisations. For example, Source Global Research has a much more conservative estimate of the UK consulting sector’s size, due to using parameters focusing on the “big consulting” market, focusing on consulting work conducted by mid-to-large-sized consulting firms (those with more than 50 consultants), which typically includes work carried out for mid-and-large-sized clients – something which may exclude many high-performing firms in the MCA’s data. At the same time, the MCA figures rely on its members, and so wider assumptions on the health of the market may need to be taken with a pinch of salt.

With that in mind, however, if the MCA’s members did see their performance replicated by the broader market, the study suggests that heightened growth may be on the horizon. According to one MCA spokesperson, while the organisation previously estimated the period between 2021 and 2022 could see 9% expansion, now this “could be slightly higher and in double digits.”

One of the factors boosting the industry’s growth potential could be the increasing internationality of UK firms’ fee income. In 2019, the MCA found that 84% of the industry’s income was from UK clients, while neighbouring Europe represented 8% of the fees coming into firms. One year later, however, the percentage of both has fallen, while fee income from the rest of the world has boomed by 15 percentage points, to account for almost one-quarter of all fees. This shows that UK consultants have been able to attract demand for their skills as clients around the world digitalise amid the pandemic – something the MCA expects which will only increase in the coming years.

Commenting on the findings, MCA CEO Tamzen Isacsson said, “The global attractiveness of the UK consulting sector, the second biggest in the world, is clear and we are now exporting to more countries than ever before thanks to new digital ways of working. Firms have made important strides in improving diversity and inclusion in some key areas such as female leadership and this momentum must continue as we increase efforts to improve progress, implement best practice and monitor the diversity of the sector workforce over time.”