COVID-19 crisis and Brexit drives boom for management consultants

·3-min read
Consultancies that deal with aviation, transport and retail saw a downturn in activity as companies were heavily impacted by lockdown restrictions. Photo: Getty
Consultancies that deal with aviation, transport and retail saw a downturn in activity as companies were heavily impacted by lockdown restrictions. Photo: Getty

Growth of 9% is expected in the management consultancy sector in 2021, highlighting its importance during a time when the coronavirus pandemic and Brexit has caused “critical periods of business disruption and transformation,” according to a new study.

The report comes amid criticism directed at the government for its spending on consultants.

The latest Annual Member Survey from the Management Consultancies Association (MCA) of 500 consultants found that although growth was less than expected for 2020 (2.5%), nearly two-thirds of consulting leaders said that consulting activity had met or exceeded expectations in the past 12 months (64%).

Some 88% of consultants predict the greatest demand for assistance from clients will be in the digital and tech sector over the next two years and activity is expected to say strong in life sciences, health, infrastructure and the public sector.

Those consultancies that deal with aviation, transport and retail saw a downturn in activity as their clients were heavily impacted by lockdown restrictions.

READ MORE: Brexit deal lets EU hit UK with unilateral tariffs

Since much of the work was done remotely, consultancies saved money on paying for employees’ flights and hotels. It also meant a greater pool of consultants was available as employees were not restricted by proximity to the client. Less travel also meant an increase in time servicing clients.

87% of consultants believed clients’ needs were fully met during the pandemic but also cited a number of disadvantages from the increased move to remote working.

73% said they had less interaction with clients and 49% saying it made it harder to tackle sensitive subjects.

Tamzen Isacsson, MCA chief, noted that “our industry will play a critical role in the future economic recovery and net zero ambitions over the next couple of years, reshaping businesses and continuing to fast-track digital transformation and consequently our forecasts look positive.”

Respondents said one of the biggest challenges over the next few years will be the requirement for more flexible working and increased remote work (73%).

The impact of the pandemic and remote working on training and development was raised as a concern and over a third (36%) of consultants stated they had not received as much training as usual or that the quality of training had declined.

Isacsson added that “as companies and clients plan their expected return to safe offices in the summer months it’s key that training and development is prioritised as many younger staff have felt disadvantaged in recent months.”

The report comes after the government was slammed by the Public Accounts Committee last month for relying too much on management consultants for work on Brexit preparations “that could be better done by civil servants”.

In October, Sky News had reported that the Boston Consulting Group was being paid around £7,000 ($9,515) a day by the government to work on the coronavirus test and trace system.

READ MORE: UK government needs to ‘sort out test and trace system’ industry chiefs say

And last week Labour party leader Keir Starmer criticised the government on Twitter for spending around £375m on 2,300 consultants for the system.

“That's just over £163,000 per consultant. On a system that has failed,” he said.

However, Isacsson, defended the government, saying it was “factually incorrect to state that all consultants are earning on average £163,000 working on test and trace.”

He explained that the charge from consulting firms including various operating costs that goes well beyond consultant salaries including product development, solution development and security system requirements.

He said the consulting sector “has provided multi-disciplinary capabilities and senior experience very quickly to support government and has helped deal with complex negotiations around data, infrastructure and procurement at pace.”

“We should remember that government is dealing with an unprecedented volume of workload and major upheaval due to COVID-19 and using external resources has enabled them to work quickly and with intensity in many areas,” he added.

WATCH: What is inflation and why is it important?