UK businesses splash out £2bn on consultancy fees

Spending on management consulting services by UK companies continues to rise after two years of decline, with quarterly revenues for the sector hitting almost £2bn for the first time.

New figures from UK consultancy trade body the Management Consultancies Association (MCA) show an underlying growth rate of 8.2 per cent in the fourth quarter of 2005, as consulting revenues hit £1.97bn.

But the boom in overall management consultancy fees is not reflected in the IT sector. Growth in IT consulting declined slightly at £421m, while outsourcing consultancy revenues grew at a slower rate than overall management consultancy at £717m.

MCA members account for around two-thirds of the UK's consulting industry revenues, with 88 per cent of its members reporting a rise in revenue for the fourth quarter.

Optimism over future revenues is also high among MCA members, with 70 per cent expecting the volume of total new orders to increase on the back of demand from the financial services sector.

Current business issues driving the demand for management consulting include cutting costs, organisational change and improving systems and processes.

David Bailey, MCA president, said in a statement: "Whilst this quarter's figures show that there is not quite a return to double digit growth, the significant increase in traditional advisory work such as strategy, HR and marketing for the second time in 2005 demonstrates that this is the start of a longer term trend."