MCA research suggests UK consulting revenues pass £20 billion mark

The UK consulting market has seen growth slow over the last year – with the member firms of the Management Consultancies Association reporting 11% revenue expansions for 2023. While still healthy, the acceleration of the market has notably slowed from its two record post-pandemic years.

Each year, the Management Consultancies Association (MCA) assesses the health of the UK market, based on the performance of its member firms. While the management consulting industry’s representative body saw growth in the sector flow to just 4.5% in 2020, the years since the pandemic have seen it record rapid growth across the firms it surveys.

In 2021, this hit 18%, while in 2022 – despite uncertainty and disruption in the broader market – member firms reported an average of 23% expansion in revenues. While 2023 still saw double-digit growth, however, it showed that the market is still cooling from these record figures.

According to the MCA, revenue growth fell to “more sustainable levels” of 11% for the last 12 months. If compared to the firm’s most recent estimate of the market size, of £18.6 billion, this 11% growth could have taken the market to revenues of more than £20.6 billion. This is still well above pre-pandemic levels, and exceeded the expectations of seven-in-ten consulting executives – but is also a decline from the MCA’s estimations late in the year, when it predicted the market was on course for 13% growth.

The organisation accordingly predicts that growth may further slow through the following year – reducing to 9%, the first time it has fallen to a single-figure in three years. But in the largest piece of research ever conducted by independent research firm Savanta Comres, which surveys the industry on behalf of the MCA, the report found that some areas are more buoyant – and may lead to a return to 11% growth in 2025.

With businesses racing to get the most from new technologies, AI and digital expertise is expected to be the area in most demand by clients – alongside cost efficiency programmes. These may also reflect concern from 41% leaders around the performance of the UK economy – with clients hoping investing in AI and reducing other spending could insulate them from inflation and rates hikes. However, 43% of consulting leaders also fears that this could lead to reduced client spending on their own services. 

Tamzen Isacsson, the MCA’s chief executive, commented, “The outlook for our sector looks positive in 2024 and beyond despite the challenging economic conditions at home and abroad which confirms that at times of uncertainty clients rely on trusted advisors and are looking to our sector for specialist expertise on the safe adoption of AI, new technology and for boosting productivity and cost efficiencies. Business confidence however thrives in stable political and economic environments and 2024 is a busy year for elections across the world which could impact the broader economic outlook and growth rates for our sector.”

AI also looks set to have a major impact on the consulting industry itself in the coming year. A 54% majority of respondents told the researchers that said they were already using AI, including 75% of consultants working in the Big Four firms. It is most used for searching for information, and enabling teams to use AI models, according to 57% and 56% of respondents respectively. This means adapting to AI developments is cited by a third of consultants as a top challenge expected for the coming year. Only reduced spend by clients at 43%, and the general slowdown of the UK economy at 41%, were higher priorities – while uncertainty around the political landscape was cited by 28% of respondents in an election year.

Meanwhile as the sector participates in a continued ‘war for talent’ to help meet these challenges, consulting continues to find new ways to accommodate its workforce. Over 100,000 management consultants work in the industry in over 350 offices across the UK. But even after the lockdown era, hybrid working in particular is driving higher satisfaction among consultants – with 69% saying so, in a boost to retention of firms. It has also helped to make the sector more attractive to work in (72% v 64% in 2023) as firms optimise their remote working processes.

Isacsson added, “It’s clear that the shift to more hybrid working has made employees happier and the challenge will be to ensure the balance is right for everyone through seizing all the advantages of digital working and its flexibility and at the same time harnessing all the benefits of face to face working and it’s beneficial impact for learning and development and face to face interaction with clients and teams. As a sector that often leads by example our job will be to find the new positive and more complicated path forward in the world of working.”

The strength of the consulting sector over the last year also earned praise from the UK's government. Minister for Industry and Economic Security, Nusrat Ghani,noted that the MCA's study were "great news for our vibrant and growing UK consulting sector."

Ghani concluded, "It is excellent to see growing demand for expertise in areas such as AI and digital technology, helping to create thousands of new jobs and grow the economy."