| KN74092 |
| KEY NOTE MANAGEMENT CONSULTANTS : April 2002 |
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This report covers: management consultancy, information technology, corporate strategy, organisational development, production management, services management, human resource management, financial systems, administrative systems, project management, marketing, corporate communications, facilities management, outsourcing,electronic consultancies, environmental studies, economic studies,
Companies covered include: Cap Gemini Ernst & Young, Pricewaterhouse Coopers, Accenture, Andersen Consulting, CSC Computer Sciences, FI Group, KPMG Consulting, PA Consulting, ICL, Fujitsu, Deloitte Consulting, Logica, Sema, Mckinsey & company, Bacon & Woodrow, Andersen, Arthur Andersen, AT Kearney,
EXECUTIVE SUMMARY
This report examines the UK market for management consultants. The market remains extremely buoyant, having shown year-on-year growth of more than 10 percent over the past decade, reaching 20 percent in some years. Key Note estimates that the market was worth £6.55bn in 2001, following an annual increase of 13.9 percent. This excludes consultancy work agreed in the UK but destined for overseas clients. Including overseas earnings, the Management Consultancies Association (MCA) estimates that the UK market was worth more than £7bn in 2001.
The market comprises nine sectors: information technology (IT); corporate strategy and organisation development; project management; financial and administrative systems; production and services management; human resources management; marketing and corporate communications; economic and environmental studies; and outsourcing. The largest sectors are outsourcing and IT.
The major client sectors in 2001 were hotels and catering, banking, transport vehicles and equipment, and telecommunications. Private-sector clients far outweigh public-sector clients in terms of consultants' fee income.
The major consultancy firms fall into one of three categories: IT companies, accountancy firms and independent consultancy organisations. IT firms are growing in importance, while the large accountancy firms are having to leave the consultancy market under pressure from the US regulatory authorities. Andersen's role as both auditor and consultant to the failed US company Enron Incorporated has turned the spotlight on the position of accountancy firms in the consultancy market. By the middle of 2003, it is likely that PricewaterhouseCoopers and Deloitte & Touche will have sold off their consultancy operations. While both firms were planning to do this anyway, there is no doubt that the collapse of Enron hastened their decisions to divest themselves of their consultancy operations. Whether the medium-sized accountancy firms will be persuaded to leave the consultancy market remains to be seen. So far, their position is secure.
Since the previous Key Note market report on management consultants was published, in April 2001, a note of caution has crept into the industry. During 2001, several of the larger consultancy firms announced job cuts and a reduction in recruitment. This was largely as a result of a downturn in one of their main client sectors — telecommunications. Consultancies remain cautious about recruitment in 2002.
Meanwhile, more IT companies are taking an interest in the consultancy market. Trade sources expect to see one or two high-profile acquisitions of consultancy firms by IT companies by the end of 2003.
Key Note forecasts that, while annual growth will slow in 2002, it will remain in double digits and begin to rise again in 2003, after which it will continue to increase to 2005. During this period, e-business will be an important driver of growth. The market will also witness continued growth in outsourcing, as well as a move towards results-based consultancy.
TABLE OF CONTENTS
| Executive Summary |
| 1. Market Definition |
| REPORT COVERAGE |
| The Role of Consultancy |
| MARKET SECTORS |
| Information Technology |
| Corporate Strategy and Organisation Development |
| Project Management |
| Financial and Administrative Systems |
| Production and Services Management |
| Human Resources Management |
| Marketing and Corporate Communications |
| Economic and Environmental Studies |
| Outsourcing |
| MARKET TRENDS |
| Strong Growth Continues |
| A Boom in Outsourcing |
| Fees |
| Value for Money |
| New Emphasis |
| MARKET POSITION |
| The UK |
| Overseas |
| KEY TRADE ASSOCIATIONS |
| Management Consultancies Association |
| Institute of Management Consultancy |
| 2. Market Size |
| INTRODUCTION |
| THE TOTAL MARKET |
| Table 1: The UK Market for Consultancy Services by Value (£bn), 1997-2001 |
| Table 2: The Total Fee Income of the Members of the Management Consultancies Association (£m), 1997-2001 |
| Table 3: The UK Consultancy Fee Income of the Members of the Management Consultancies Association by Market Sector (£m), 1998-2001 |
| BY INDUSTRY SECTOR |
| Table 4: The UK Private- and Public-Sector Fee Income of the Members of the Management Consultancies Association (£m), 1997-2001 |
| The Private Sector |
| Table 5: UK Private-Sector Fee Income of the Members of the Management Consultancies Association by Sector (£m), 2001 |
| The Public Sector |
| Table 6: UK Public-Sector Fee Income of the Members of the Management Consultancies Association by Sector (£m), 2001 |
| MARKET SECTORS |
| Information Technology |
| Corporate Strategy and Organisation Development |
| Project Management |
| Financial and Administrative Systems |
| Production and Services Management |
| Human Resources |
| Marketing and Corporate Communications |
| Economic and Environmental Studies |
| Outsourcing |
| OVERSEAS CONSULTANCY |
| Table 7: The Consultancy Fee Income of the Members of the Management Consultancies Association from Work Carried Out in the EU by Market Sector (£m), 1998-2001 |
| 3. Industry Background |
| HISTORICAL DEVELOPMENT |
| RECENT HISTORY |
| INDUSTRY STRUCTURE |
| Accountancy-Based Firms |
| IT and Telecommunications Companies |
| US-Based Consultancies |
| Small and Medium-Sized Consultancies |
| Actuarial Firms |
| Business Schools |
| Small Consultancies |
| Sole Practitioners |
| E-Consultancies |
| NUMBER OF COMPANIES |
| EMPLOYMENT |
| REGIONAL VARIATIONS IN THE MARKETPLACE |
| HOW ROBUST IS THE MARKET? |
| 4. Competitor Analysis |
| THE MARKETPLACE |
| Table 8: Top 15 Management Consultancies by UK Fee Income (£m), 2000/2001 |
| MARKET LEADERS BY SECTOR |
| Information Technology |
| Corporate Strategy and Organisation Development |
| Project Management |
| Financial and Administrative Systems |
| Production and Services Management |
| Human Resources |
| Marketing |
| Economic and Environmental Studies |
| Outsourcing |
| MAJOR UK SUPPLIERS |
| Accenture |
| PricewaterhouseCoopers |
| Cap Gemini Ernst & Young UK PLC |
| Xansa PLC |
| KPMG Consulting |
| ICL PLC/Fujitsu Consulting |
| PA Consulting Group |
| Logica PLC |
| Andersen |
| CMG PLC |
| Deloitte Consulting Ltd |
| Sema Ltd |
| CSC Computer Sciences Ltd |
| The Capita Group PLC |
| McKinsey & Company |
| OUTSIDE SUPPLIERS |
| ADVERTISING AND PROMOTION |
| Table 9: Main Media Advertising Expenditure by Management Consultants (£000), 2000 and 2001 |
| 5. Strengths, Weaknesses, Opportunities and Threats |
| STRENGTHS |
| WEAKNESSES |
| OPPORTUNITIES |
| THREATS |
| 6. Buying Behaviour |
| TYPES OF CLIENT |
| APPROACHES TO BUYING |
| THE ONE-STOP SHOP VS THE CONSORTIUM |
| CLIENT REQUIREMENTS |
| CONSULTANCY INDEPENDENCE |
| CLIENT Satisfaction |
| PAYMENT |
| 7. Current Issues |
| INTRODUCTION |
| THE POSITION OF THE ACCOUNTANCY-BASED FIRMS |
| THE INCREASING PRESENCE OF IT COMPANIES |
| BALANCING STAFF NUMBERS |
| MERGERS AND ACQUISITIONS |
| OTHER CORPORATE DEVELOPMENTS |
| Arthur D Little |
| Fujitsu |
| Celerant Consulting |
| Impact Plus |
| INDUSTRY AWARDS |
| 8. The Global Market |
| INTRODUCTION |
| THE WORLD MARKET |
| GLOBAL CONSULTANCIES |
| THE EUROPEAN MARKET |
| 9. Forecasts |
| ECONOMIC FORECASTS |
| FUTURE TRENDS |
| Return on Investment |
| The Spread of Outsourcing |
| Results-Based Consultancy |
| E-Business |
| The Need for Change |
| FORECASTS 2002 TO 2006 |
| Table 10: The Forecast UK Market for Consultancy Services by Value (£bn), 2002-2006 |
| 10. Company Profiles |
| Cap Gemini Ernst & Young UK PLC |
| The Capita Group PLC |
| CMG PLC |
| Fujitsu Services Holdings PLC |
| Logica PLC |
| Sema Ltd |
| Xansa PLC |
| 11. Further Sources |
| Associations |
| Periodicals |
| Directories |
| General Sources |
| Bonnier Information Sources |
| Government Publications |
| Other Sources |
| Key Note Research |
Text © 2002 Key Note
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Last updated by Amanda Porteous February 2004
