Consultancies report growth but talk of caution

The UK consulting industry notched up double-digit growth in June for the first time in three years, despite lower fees from the private sector and fewer contracts from the public sector.

In half-yearly findings due this week, the Management Consultancies Association will say that IT and management consultancies saw 2011 as a “significant improvement” on 2010, and particularly 2009.

Then, the consulting industry contracted by two per cent. Growth returned last year, albeit marginally (+6 per cent) though in 2011 it appears to have consolidated, with growth of 11 per cent.

Adding some context, the MCA reminded that the first six months of the year is usually the high point for growth among its member companies, who account for 75% of the UK consulting market.

Moreover, while 2011 “started well” for consultancies, “firms are cautious about the rest of the year,” said MCA chairman Alan Leaman, before pointing to the currently “tough economic climate”.

This helps explain why, although there was potential growth in orders during the first six months of the year, a growing chunk of professional consultancies reported a drop in income.

Work from the state sector dried up, MCA firms said of the period - in contrast to that from financial services and manufacturing, where 71% and 63% respectively had secured more contracts.

Primary markets, such as utilities and mining, are also increasingly buoyant for IT and management consultancies which, overall, are more optimistic about the public sector than they were a year ago.