Technology consulting dominated 2013: growing by an impressive 7 per cent to over £2bn. The Source Information Services report released today (17th February 2014) also found that the UK is shifting away from big ERP implementation projects and towards strategy, digitisation generally, and specific new technologies.
Retail - the fastest growth sector is grappling with multi-channel
The report found that there is a lot of interest in specific new technologies – particularly those associated with customer interfaces such as multi-channel, social media and the associated infrastructure developments required to make these work. This is highlighted in the retail sector, which experienced the highest rate of growth (8.6 per cent to £241m), as it is grapplingwith multi-channel and the need, amongst traditional retailers, to close the gapbetween themselves and the likes of Amazon.
Kevin McCarten, Partner, Oliver Wyman, said: “There's been a lot of activity around analytics and big data, moving out from the consumer packaged goods sector to high tech companies; grocery retailing will be next and the leisure sector is just over the horizon. The most advanced sectors have seen a feeding frenzy of developments, a market that's come out of nothing in the last couple of years to a point where many clients think that, if they could use data better, their business could perform better.”
Big Four grows at twice the rate of any other firm type…
The Big Four did especially well in 2013, growing revenues across all service lines at twice the rate (8 per cent) of any other firm type. These firms have been especially acquisitive recently, so part of their success can be attributed to them buying market share, but they’re picking up a lot of work in the all-important financial services sector.
Michael Robinson, UK Head of Management Consulting, KPMG, said: “For 2014 we believe that a key driver for work in all sectors will be based on how technology is used to transform business and we will continue to see CIO agendas, cyber and technology enablement set around customer and digital developments. In particular, mobile applications, the next generation business process management tools, data and analytics and cloud based solutions will reduce dependency on the provision of services from the in-house IT function. This will enable the CIO to grapple withthe issue of protecting the business from cyber threats, seeking to significantly improve service and simultaneously reduce cost.”
The UK market as a whole
The UK consulting market also experienced positive growth - up 4.8 per cent to just under £5.6bn - and is predicted to grow by between 5-10 per cent in 2014 – making it one of Europe’s star performers.The financial services consulting market, which accounts for about a third of the entire UK market, has delivered most growth in revenue terms to consulting firms.
Technology is the area in which the second-highest proportion of clients (42 per cent) believe their consulting spend will increase. The outlook for the UK consulting market remains as a whole also remains positive: with over a third (34 per cent) of clients expecting consulting expenditure to increase in 2014, while just a quarter (26 per cent) expect it to decrease, and Source is forecasting growth in every sector and service line.
Edward Haigh, a director of Source and an author of the report, concluded: “The prospects for growth look good in the all-important financial services sector and when this sector is firing the UK consulting market takes some stopping. Even more significant is the fact that more than half the financial institutions we spoke to – most of which will be big spenders on technology and IT consulting – think their expenditure on consulting will increase.”
“Across all consulting service lines, the star of the show will probably be the retail sector, which is grappling with the challenges it faces in a multi-channel environment and calling on consultants to help it as it does. Retailers drive a hard bargain and will often expect consultants to commit to delivering specified outcomes, but we still expect double-digit growth in the sector’s consulting market.”
 Note that the Source definition of the market refers to what we call “big consulting” only – see notes to editors.