'Old school' consulting outstrips demand for outsourcing help

Firms are increasingly calling in consultants to help generate new profits, rather than implement cost-cutting measures such as outsourcing.

After two years where spending on traditional management consulting shrunk by almost 10 per cent, 2005 saw it rocket 40 per cent to £3.1bn, according to figures from the Management Consultancies Association (MCA).

By contrast, outsourcing-related consulting - which had driven growth in previous years - only grew at 15 per cent in 2005, compared to 46 per cent in 2003 and 18 per cent in 2004. IT consulting grew at 10 per cent in 2005, slightly down on 2004.

The MCA calculates the UK consulting industry is now worth around £11.9bn.

Spending on consultants grew fastest in financial services, where consultants saw their fee income jump 50 per cent to £1.4bn in 2005. Spending by the manufacturing sector - one of the more difficult consulting markets of recent years - also grew by 20 per cent.

Author of the MCA report Fiona Czerniawska said consulting companies of all sizes have seen substantial levels of growth.

Czerniawska attributed this in part to renewed business confidence, with clients looking for revenue generating projects rather than cost reduction.