Outsourcing makes UK top spender on consultants

The UK is the biggest spender on consultants in Europe, fuelled by outsourcing, banking compliance work and big government projects.

Accounting for 29.3 per cent of the market, the UK continues to be the biggest spender on consulting, growing by 7.2 per cent last year, according to a report by Feaco, the European Federation of Management Consultancies Associations.

In particular, outsourcing has taken off as an acceptable strategy, in part because people have seen the first generation of outsourcing contracts delivering results.

Feaco said consultants are also in demand when the original outsourcing contractor is replaced or when an outsourced service is taken back in house.

Public sector contracts will continue to be an important source of revenue, accounting for more than 20 per cent of revenue. With the 2012 Olympics an important driver for the UK market in the future, this growth is expected to continue, Feaco said.

The report also found UK banks have substantially increased their use of consultants by 62 per cent from £249m in 2003 to £404m in 2004 as regulatory topics such as Basel II provide work for consultants.

As a result of all this, management consultants' turnover in the UK rose by 35 per cent in 2003 and 2004.

Across Europe revenues for management consultancy grew by 3.7 per cent last year to €48.5bn last year. This means spending on consultants has almost tripled in size in the last eight years.

However, spending on IT and systems integration work across Europe declined by 6.1 per cent - although IT consulting still makes up about a quarter of the total market.

In contrast, with a growth rate of 11.4 per cent, outsourcing was the fastest growing management consultancy practice.

Outgoing Feaco chairman Rémi Redley said the market is likely to grow at the same rate this year. "The need for companies to be competitive appears to be a major driver of demand for consultancy services in all eastern and western European countries", he said.